Vaxcyte prices US$1B in stock, warrants and convertible notes
Vaxcyte expects both underwritten offerings to close Oct. 9, adding funds for adult vaccine trials and manufacturing ahead of a planned U.S. filing.
Adrian Kessler
About US$1 billion in gross financing is set to back pneumococcal vaccine trials after Vaxcyte, Inc. NASDAQPCVX priced concurrent stock, warrant and convertible-note offerings on Oct. 6. The company's pricing release puts expected proceeds at about US$500 million from each offering before fees, with a proposed Oct. 9 close.
The equity offering comprises 7,412,500 common shares at US$64 each and 400,000 pre-funded warrants at US$63.999 each. Every warrant can be exercised for US$0.001 a share, while the separate US$500 million note offering carries a 1.5 per cent coupon and matures in 2032.
Vaxcyte is a San Carlos, Calif., clinical-stage developer of pneumococcal vaccines for adults and children. Its lead adult candidate, VAX-31, is in late-stage testing, and the company plans to spend part of the financing on manufacturing capacity and preparations for a potential U.S. launch.
The NASDAQPCVX quote available for this report showed Vaxcyte at US$56.48 at the Oct. 2, 4 p.m. EDT Nasdaq close. The quote did not show an Oct. 6 close, so the offer's discount to the latest close cannot be calculated. Vaxcyte released the terms at 10:48 p.m. EDT on Oct. 6, after regular trading.
The Shares Add Potential Dilution
The stock and warrant tranches represent 7,812,500 potential common shares. If the warrants are exercised, that would equal about 5.2 per cent of the 148.81 million shares outstanding displayed by NASDAQPCVX at its Oct. 2, 4 p.m. EDT quote.
The pricing release gives equity underwriters a 30-day option to buy another 1,171,875 shares, and note underwriters can purchase up to US$75 million more principal. Vaxcyte said the two transactions can close independently, so neither offering is contingent on completion of the other.
The senior unsecured notes initially convert at about US$89.60 a share, which Vaxcyte described as a 40 per cent premium to the stock offering price. It can settle any conversion in cash, shares or a mix, leaving the note offering's eventual share dilution dependent on its choice and future conversion conditions.
Jefferies and Leerink Partners are joint bookrunners on both offerings, alongside other banks. Vaxcyte said it will direct net proceeds to the adult OPUS-2 and OPUS-3 studies, an infant dose-finding study, manufacturing scale-up and preparations for a possible adult launch.
Vaxcyte had already reported a substantial cash reserve before this financing. Chief financial officer Andrew Guggenhime described it in the company's Aug. 5 results:
"With $2.5 billion in cash, cash equivalents and investments as of June 30, 2026, we maintain a strong balance sheet and are well positioned to execute on our planned clinical, manufacturing and commercial-readiness milestones across our PCV development programs."
Guggenhime said this in the company's Aug. 5 financial results. The Oct. 6 pricing release gave no revised cash runway, and gross proceeds exclude underwriting discounts and other expenses.
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OPUS-2 And OPUS-3 Results Are Due In 2027
In its Oct. 5 OPUS-1 announcement, Vaxcyte said the trial met its co-primary immunogenicity endpoints. For adults aged 50 and older, VAX-31 was compared with PCV20 and/or PCV21 across relevant serotypes.
The company said a separate primary immunobridging endpoint was met. It compared vaccine recipients aged 18 to 49 with those aged 50 to 64. The release reported a similar safety profile, but the financing still precedes results from other adult trials and the planned infant readouts.
Read more: Vaxcyte reports VAX-31 met all OPUS-1 primary immune endpoints
The commercial peer is Merck & Co., Inc. NYSEMRK, whose Aug. 4 results put CAPVAXIVE sales at US$184 million in the second quarter of 2026, up from US$129 million a year earlier. Merck reported US$148 million in VAXNEUVANCE sales for the same quarter, down from US$229 million. Its NYSEMRK shares closed at US$141.94 at 4:04 p.m. EDT on Oct. 6 on the NYSE.
Vaxcyte expects OPUS-2 and OPUS-3 results in the first half of 2027 and plans a U.S. biologics licence application in the first half of 2028. The expected Oct. 9 close would settle whether both base offerings complete, while the underwriters' 30-day options could add proceeds afterward.
