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 September 30, 2022

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.)
825 Industrial Road, Suite 300 San Carlos, California	94070
(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

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 November 3, 2022, the registrant had 78,980,196 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations	2
	Condensed Statements of Comprehensive Loss	3
	Condensed Statements of Stockholders’ Equity	4
	Condensed Statements of Cash Flows	6
	Notes to Unaudited Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	87
Item 6.	Exhibits	88
Signatures		89

Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “our company” and “Vaxcyte” refer to Vaxcyte, Inc.

“Vaxcyte,” “eCRM,” and other trademarks of ours appearing in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.

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 Quarterly Report on Form 10-Q, 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 of 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 future 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 and our third-party manufacturers’ 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; and

•the volatility of the trading price of our common stock.

ii

Actual events or results may differ from those expressed in forward-looking statements. 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 titled “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

Summary of Risks Affecting Our Business

Our business is subject to numerous risks and uncertainties, including those discussed more fully in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q. These risks include, but are not limited to, the following:

•We are in the clinical or preclinical of vaccine development and have a very limited operating history and no products approved for commercial sale, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

•We have incurred significant net losses since inception and anticipate that we will continue to incur substantial net losses for the foreseeable future. We currently have no source of product revenue and may never achieve profitability. Our stock is a highly speculative investment.

•We will require substantial additional funding to finance our operations, which may not be available to us on acceptable terms, or at all. If we are unable to raise additional capital when needed, we could be forced to delay, reduce or terminate certain of our development programs or other operations.

•Our approach to the discovery and development of our vaccine candidates is based on novel technologies that are unproven, which may expose us to unforeseen risks, require us to modify processes, and make it difficult to predict the time and cost of vaccine candidate development and the timing to apply for and obtain regulatory approvals.

•Our vaccine candidates are in clinical or preclinical stages of development and may fail in development or suffer delays that materially and adversely affect their commercial viability. If we are unable to complete development of or commercialize our vaccine candidates or experience significant delays in doing so, our business would be materially harmed.

•The U.S. Food and Drug Administration ("FDA") may disagree with our regulatory plan, and we may fail to obtain regulatory approval of our vaccine candidates.

•Our business is highly dependent on the success of VAX-24, which is in clinical development. If we are unable to obtain approval for VAX-24 and effectively commercialize VAX-24, our business would be significantly harmed.

•Our primary competitors have significantly greater resources and experience than we do, which may make it difficult for us to successfully develop our vaccine candidates, or may result in others discovering, developing or commercializing products before or more successfully than us.

•We may not be successful in our efforts to use our cell-free protein synthesis platform to expand our pipeline of vaccine candidates and develop marketable products.

•We currently rely on third-party manufacturing and supply partners, including Lonza Ltd. and Sutro Biopharma, Inc. to supply raw materials and components for, and manufacture of, our preclinical and clinical supplies as well as our vaccine candidates. Our inability to procure necessary raw materials or to have sufficient quantities of preclinical and clinical supplies or the inability to have our vaccine candidates manufactured, including delays or interruptions at our third-party manufacturers, or our failure to comply with applicable regulatory requirements or to supply sufficient quantities at acceptable quality levels or prices, or at all, would materially and adversely affect our business.

•Health epidemics, including the effects of the ongoing COVID-19 pandemic, have impacted and could continue to impact our business, including in regions where we or third parties on which we rely have significant manufacturing facilities, concentrations of potential clinical trial sites or other business operations.

•The FDA regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory approval of our vaccine candidates.

•If we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.

iv

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

VAXCYTE, INC.

Condensed Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	September 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	278,401		$	68,985
Short-term investments		83,825			176,985
Prepaid expenses and other current assets		7,533			10,378
Total current assets		369,759			256,348
Property and equipment, net		9,947			7,954
Operating lease right-of-use assets		22,887			27,958
Long-term investments		3,977			27,117
Restricted cash		871			871
Other assets		4,624			4,089
Total noncurrent assets		42,306			67,989
Total assets	$	412,065		$	324,337
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	5,485		$	6,758
Accrued compensation		3,451			3,455
Accrued manufacturing expenses		10,269			4,440
Accrued expenses		13,678			8,787
Operating lease liabilities — current		6,426			5,276
Total current liabilities		39,309			28,716
Operating lease liabilities — long-term		13,356			11,507
Other liabilities		89			96
Total liabilities		52,754			40,319
Commitments and contingencies (Note 6)
Stockholders' Equity
Preferred stock, $0.001 par value — 10,000,000 shares authorized at    September 30, 2022 and December 31, 2021; no shares issued and outstanding    at September 30, 2022 and December 31, 2021		—			—
Common stock, $0.001 par value — 500,000,000 shares authorized at    September 30, 2022 and December 31, 2021; 60,572,692 and 53,031,978 shares    issued and outstanding at September 30, 2022 and December 31, 2021, respectively		64			56
Additional paid-in capital		803,980			582,844
Accumulated other comprehensive loss		(657	)		(241	)
Accumulated deficit		(444,076	)		(298,641	)
Total stockholders' equity		359,311			284,018
Total liabilities and stockholders' equity	$	412,065		$	324,337

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

1

VAXCYTE, INC.

Condensed Statements of Operations

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Operating expenses:
Research and development (including related party expenses of $0    and $0 for the three months ended September 30, 2022 and 2021,    respectively, and $0 and $2,359 for the nine months ended    September 30, 2022 and 2021, respectively)	$	47,679		$	20,428		$	117,825		$	55,337
General and administrative		10,898			6,523			27,858			18,487
Total operating expenses		58,577			26,951			145,683			73,824
Loss from operations		(58,577	)		(26,951	)		(145,683	)		(73,824	)
Other income (expense), net:
Interest expense		—			—			(2	)		(7	)
Interest income		1,190			90			1,723			245
Grant income		157			299			1,006			677
Realized gain on marketable securities		—			1			—			2
Foreign currency transaction gains (losses)		(687	)		(54	)		(2,479	)		1,393
Total other income (expense), net		660			336			248			2,310
Net loss	$	(57,917	)	$	(26,615	)	$	(145,435	)	$	(71,514	)
Net loss per share, basic and diluted	$	(0.93	)	$	(0.51	)	$	(2.42	)	$	(1.39	)
Weighted-average shares outstanding, basic and diluted		61,989,347			52,187,303			60,166,583			51,627,249

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

2

VAXCYTE, INC.

Condensed Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net Loss	$	(57,917	)	$	(26,615	)	$	(145,435	)	$	(71,514	)
Other comprehensive loss:
Unrealized gains (losses) on investments		247			(4	)		(416	)		(12	)
Comprehensive loss	$	(57,670	)	$	(26,619	)	$	(145,851	)	$	(71,526	)

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

3

VAXCYTE, INC.

Condensed Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

											Accumulated
					Additional						Other			Total
	Common Stock				Paid-in			Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Capital			Deficit			Loss			Equity
Balance — December 31, 2021		53,031,978	$	56	$	582,844		$	(298,641	)	$	(241	)	$	284,018
Exercise of stock options		91,044		—		282			—			—			282
Vesting of early exercised stock options		—		—		2			—			—			2
Issuance of common stock and pre-funded    warrants in connection with    follow-on public offering, net of    issuance costs of $7,376		3,250,000		3		107,619			—			—			107,622
Issuance of common stock in connection    with at-the-market offering, net of    commissions and offering expenses of $114		126,522		—		3,098			—			—			3,098
Stock-based compensation expense		—		—		4,099			—			—			4,099
Unrealized losses on investments		—		—		—			—			(592	)		(592	)
Net loss		—		—		—			(38,986	)		—			(38,986	)
Balance — March 31, 2022		56,499,544	$	59	$	697,944		$	(337,627	)	$	(833	)	$	359,543
Exercise of stock options		77,065		1		323			—			—			324
Vesting of early exercised stock options		—		—		2			—			—			2
Issuance of common stock in connection    with at-the-market offering, net of    commissions and offering expenses of $1,509		2,010,806		2		48,786			—			—			48,788
Issuance of common stock under Employee Stock Purchase Plan		36,879		—		550			—			—			550
Issuance costs for public follow-on offering		—		—		2			—			—			2
Stock-based compensation expense		—		—		5,894			—			—			5,894
Unrealized losses on investments		—		—		—			—			(71	)		(71	)
Net loss		—		—		—			(48,532	)		—			(48,532	)
Balance — June 30, 2022		58,624,294	$	62	$	753,501		$	(386,159	)	$	(904	)	$	366,500
Exercise of stock options		222,358		—		1,757			—			—			1,757
Vesting of early exercised stock options		—		—		2			—			—			2
Issuance of common stock in connection    with at-the-market offering, net of    commissions and offering expenses of $1,261		1,679,437		2		42,933			—			—			42,935
Release of restricted stock units		46,603		—		(861	)		—			—			(861	)
Stock-based compensation expense		—		—		6,648			—			—			6,648
Unrealized gains on investments		—		—		—			—			247			247
Net loss		—		—		—			(57,917	)		—			(57,917	)
Balance — September 30, 2022		60,572,692	$	64	$	803,980		$	(444,076	)	$	(657	)	$	359,311

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

4

VAXCYTE, INC.

Condensed Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

										Accumulated
					Additional					Other		Total
	Common Stock				Paid-in		Accumulated			Comprehensive		Stockholders’
	Shares		Amount		Capital		Deficit			Loss		Equity
Balance — December 31, 2020		51,071,593	$	54	$	544,353	$	(198,564	)	$	—	$	345,843
Exercise of stock options		267,208		—		487		—			—		487
Vesting of early exercised    stock options		—		—		9		—			—		9
Stock-based compensation    expense		—		—		1,865		—