Executive Summary / Key Takeaways

• Evaxion A/S leverages its proprietary AI-Immunology platform to develop precision vaccines for cancer and infectious diseases, positioning itself at the forefront of a transformative era in biotechnology.
• The recent out-licensing of EVX-B3 to MSD for a $7.5 million upfront payment and significant potential milestones, alongside the ongoing EVX-B2 evaluation, validates Evaxion's technology and significantly strengthens its financial position.
• The company boasts a robust pipeline, with its lead personalized cancer vaccine EVX-01 showing promising Phase II data and extending to a three-year readout, complemented by new infectious disease programs like EVX-B4 and EVX-V1.
• Evaxion has extended its cash runway until mid-2026, potentially into 2027 with further business development, supported by a recent European Investment Bank (EIB) loan conversion and disciplined operational cash burn guidance of approximately $14 million for 2025.
• Despite challenging market conditions impacting deal execution, Evaxion's technological edge and upcoming clinical milestones position it for potential value realization in a competitive biotech landscape.

Setting the Scene: AI-Immunology at the Core

Evaxion A/S (NASDAQ:EVAX) stands at the forefront of a transformative era in biotechnology, harnessing the power of artificial intelligence to redefine vaccine development. Incorporated in 2008 in Horsholm, Denmark, the company has meticulously built a foundation around its proprietary AI-Immunology platform, a core differentiator in the competitive landscape of precision medicine. Evaxion's strategic approach is multifaceted, focusing on a multi-partner model to unlock value from both its advanced platform and a rapidly expanding pipeline across oncology and infectious diseases. This strategy positions Evaxion as an innovator in a market increasingly demanding targeted and efficient therapeutic solutions.

Technological Differentiation and Innovation

Evaxion's AI-Immunology platform is its central technological moat, designed to identify novel vaccine targets and optimize vaccine candidates with unprecedented precision. This platform comprises several key building blocks, including EvaxMHC and EDEN. EvaxMHC is critical for predicting which peptide fragments from pathogens and cancer cells are most likely to be displayed on the surface of cells, thereby making them critical vaccine targets. Recent improvements to EvaxMHC, utilizing state-of-the-art deep learning frameworks and trained on extensive public and proprietary data, have demonstrated enhanced performance compared to publicly available tools. This improvement is anticipated to further boost the accuracy of vaccine target prediction and lead to superior vaccine designs.

Further enhancing its technological edge, Evaxion launched an upgraded version of its EDEN model, version 5.0, in September 2024. The overarching objective of this upgrade is to significantly increase EDEN's predictive capabilities, enabling the identification of antigens with greater certainty and potentially discovering targets previously inaccessible. This advancement includes an expanded training data set, incorporating predictions of bacterial toxins as a new feature, and advanced protein feature prediction through a fine-tuned protein language model. For investors, these technological advancements are crucial; they underpin Evaxion's ability to accelerate R&D, potentially lower development costs by improving target selection, and enhance the efficacy of its vaccine candidates, thereby strengthening its competitive position against larger, more traditional pharmaceutical players.

Competitive Landscape and Positioning

In the highly competitive biotech sector, Evaxion faces a diverse array of rivals, from established pharmaceutical giants to nimble biotech innovators. Direct competitors like BioNTech SE (BNTX), Moderna, Inc. (MRNA), Gilead Sciences, Inc. (GILD), and Merck & Co., Inc. operate in overlapping therapeutic areas, particularly in cancer immunotherapies and vaccine development. While companies like BioNTech and Moderna have achieved significant commercial success with mRNA-based vaccines, leading to robust revenue growth and cash flow, Evaxion differentiates itself through its AI-driven precision. Evaxion's AI-Immunology platform offers a potentially more targeted approach, aiming for greater efficiency in clinical trials and potentially lower development costs in certain AI-optimized therapies compared to the broader mRNA focus of its peers. However, Evaxion, being an earlier-stage company, currently lags these larger competitors in terms of profitability, cash flow generation, and market share. Its financial metrics, such as negative net profit margins and operating margins, reflect its investment phase, contrasting with the more established revenue streams and efficiencies of its commercialized rivals.

Evaxion's strategic focus on AI-driven innovation positions it to exploit niches with significant unmet medical needs where traditional approaches have fallen short. For instance, in the context of gonorrhea, where a recent UK initiative to repurpose a meningitis vaccine highlighted the "level of desperation for having some effective therapy," Evaxion's EVX-B2 program aims for a more precise and complete protection. Similarly, for Group A Streptococcus (GAS) and Cytomegalovirus (CMV), where no approved vaccines exist despite long-standing efforts, Evaxion's multi-target AI approach seeks to overcome the limitations of traditional methods. This technological advantage allows Evaxion to potentially achieve superior innovation speed and product performance in specific areas, even as it works to scale its operations and build its market presence against the formidable financial and distribution strengths of companies like Gilead and Merck.

Pipeline Progress and Strategic Initiatives

Evaxion's pipeline reflects its dual focus on oncology and infectious diseases, driven by its AI-Immunology platform. The lead asset, EVX-01, a personalized peptide-based cancer vaccine for advanced melanoma, is currently in Phase II clinical development. The main part of the EVX-01 Phase II trial has completed dosing, with patients now recruited for a one-year extension phase. This extension, which involves minimal additional costs, will administer EVX-01 as a monotherapy to better understand its stand-alone effect and generate three-year clinical outcome data, creating a "very strong data package". Positive biomarker and T-cell immune data from EVX-01 were presented at AACR in April 2025, demonstrating that 80% of the new antigens elicited an immune response, a frequency "substantially higher than what has been reported for other similar vaccine candidates". The upcoming two-year clinical efficacy data for EVX-01, accepted for oral presentation at the ESMO Congress in October 2025, represents a significant value catalyst and a crucial opportunity for partner discussions. Evaxion is actively seeking partners to advance EVX-01 towards registration, and plans to seek FDA advice on the registration path.

In infectious diseases, Evaxion has made significant strides, notably through its collaboration with MSD . On September 25, 2025, Evaxion out-licensed its vaccine candidate EVX-B3 to MSD , receiving a $7.5 million upfront cash payment and becoming eligible for up to $592 million in future development, regulatory, and sales milestone payments, plus royalties. MSD will assume full responsibility for EVX-B3's further development. The evaluation period for EVX-B2, targeting N. gonorrhoeae, has been extended, with MSD's decision on potential in-licensing now anticipated in the first half of 2026. If exercised, this option would bring Evaxion a $2.5 million cash payment and eligibility for up to $592 million in milestone payments and royalties. These partnerships not only provide non-dilutive funding but also serve as significant validation of Evaxion's AI-Immunology platform.

The infectious disease pipeline has also expanded with EVX-B4, a discovery program initiated in June 2025, aimed at developing a preventive vaccine against Group A Streptococcus (GAS). Initial computational analysis using AI-Immunology has already identified novel vaccine targets for this pathogen, for which no vaccine currently exists. Additionally, Evaxion received a grant from the Gates Foundation to apply its platform to design a subunit vaccine against polio, a project progressing according to plan that could lead to further collaborations. The company's EVX-V1 program, a multicomponent vaccine for Cytomegalovirus (CMV), is in early preclinical development, with lead antigen selection expected in the second half of 2025. Evaxion has acquired full rights to EVX-V1, allowing it to independently drive the program forward. Initial data from EVX-V1 demonstrates a proprietary glycoprotein B antigen with superior virus neutralization and the induction of potent antibody and cellular immune responses in immunized animals, highlighting the potential of its multi-target approach.

Financial Performance and Liquidity

Evaxion's financial performance in 2024 and the first half of 2025 reflects its clinical-stage nature and strategic investments in R&D, alongside a disciplined approach to cost management. For the full year 2024, the company recorded revenue of $3.3 million, primarily from the MSD option and license agreement. The net loss for 2024 improved to $10.6 million, compared to $22 million in 2023, driven by increased revenue and reduced R&D and G&A expenses, largely due to headcount reductions and organizational changes.

In the second quarter of 2025, Evaxion reported an operating loss of $4.3 million, an improvement from $4.6 million in Q2 2024. The net loss for Q2 2025 was $4.8 million, down from $6.2 million in the prior year, mainly due to lower net financial expenses of $0.7 million, compared to $1.8 million in Q2 2024, influenced by derivative liability reassessments. R&D project costs are anticipated to increase in the second half of 2025, while overall operating expenses for the full year 2025 are expected to remain consistent with 2024 levels.

Liquidity has been a key focus, with Evaxion significantly strengthening its cash position.

As of June 30, 2025, cash and cash equivalents stood at $14.7 million, providing a projected cash runway until mid-2026. This projection is notably conservative, as it does not include potential income from the MSD option exercise for EVX-B2 or any new business development deals, which could extend the runway into 2027. A crucial financial maneuver was the finalization of a debt settlement agreement with the European Investment Bank (EIB) on July 11, 2025. This converted EUR 3.5 million of a EUR 7 million loan into equity, immediately increasing Evaxion's equity by $4.1 million, simplifying its balance sheet, and reducing future liabilities. Total equity at the end of June 2025 was $6.2 million, further bolstered by this EIB agreement. The company's operational cash burn is guided to be approximately $14 million for the full year 2025, a testament to its ongoing cost optimization efforts despite increased activity levels.

Outlook and Guidance

Evaxion's outlook for the remainder of 2025 and beyond is characterized by several potential value catalysts and a continued focus on its multi-partner strategy. The company's business development pipeline remains robust, supporting its target of at least two new business development deals in 2025. Management acknowledges the challenging financial markets and increased regulatory uncertainty impacting deal execution, but is mitigating this by focusing on partners less affected by the macro environment.

Key upcoming milestones include the presentation of EVX-01 two-year clinical efficacy data at the ESMO Congress in October 2025. The decision from MSD regarding the option exercise for EVX-B2 is now expected in the first half of 2026, a critical event that could bring in a $2.5 million cash payment and significant future milestones. Evaxion is also on track for the final lead selection of its precision ERV cancer vaccine candidate in the second half of 2025 and aims to add another infectious disease candidate to its pipeline in the same period. These milestones, combined with the strengthened cash runway, underscore management's confidence in executing its strategy and generating future value.

Conclusion

Evaxion is strategically positioned at the intersection of artificial intelligence and immunology, leveraging its proprietary AI-Immunology platform to develop next-generation vaccines for critical unmet medical needs in oncology and infectious diseases. The recent out-licensing of EVX-B3 to MSD , securing an upfront payment and substantial potential milestones, serves as a powerful validation of its technological prowess and multi-partner business model. With a robust pipeline, including the promising personalized cancer vaccine EVX-01 advancing through extended Phase II trials and new infectious disease programs like EVX-B4, Evaxion is building a compelling narrative of innovation and value creation.

The company's prudent financial management, evidenced by a strengthened cash runway extending into mid-2026 (with potential for further extension from upcoming partnerships) and a disciplined operational cash burn, provides a solid foundation for executing its ambitious development roadmap. While the biotech sector presents inherent risks, including market volatility and intense competition, Evaxion's technological differentiation, strategic partnerships, and upcoming clinical and business development catalysts underscore its potential for long-term growth. Investors should closely monitor the two-year EVX-01 data readout at ESMO, the outcome of the EVX-B2 option exercise by MSD (MRK), and the progress of its expanding infectious disease pipeline, as these events are poised to be pivotal in realizing Evaxion's investment thesis.