We look forward to sharing important updates on the progress of our PCV franchise this year. And I would now like to turn the call over to Andrew.
Andrew Guggenhime: Great. Thanks, Jim. On the financials, with respect to the income statement, the details of our fourth-quarter and full-year 2023 results and the reasons for the variances to the comparable 2022 periods are reflected in our 10-K filing and summarized in our press release. The year-over-year increase in R&D expenses was driven primarily by higher manufacturing expenses related to the planned adult Phase 3 clinical trials and potential future commercial launches of our PCV programs. Both R&D and G&A expenses also grew, as we invested in our team to support our recent and anticipated growth. The acquired manufacturing rights expense of $75 million for the fourth quarter and full year 2023 was related to the exercise of the option with Sutro Biopharma, of which $50 million was paid in cash in the fourth quarter.
The 2022 expense for the same item was related to the upfront consideration incurred in connection with the original option agreement entered into Sutro. I would also note the contribution of the interest income line as a function of our higher cash and investment balances and the higher interest rate environment. As we look forward, we expect an increase in 2024 R&D and G&A operating expenses over both full-year and Q4 2023 annualized levels, particularly within R&D. This expected increase is primarily a function of our investment to make the required clinical trial materials for a potential VAX-24 or VAX-31 Phase 3 Adult Program, which will consist of multiple trials, and to continue manufacturing activities to support the potential future commercial launches of our PCV programs.
While we expect substantial annual growth of our R&D expenses, we do expect the amount to vary by quarter depending on timing of manufacturing activities. For G&A, we expect the expense growth to be generally steady by quarter. At this time, we do not anticipate any future acquired manufacturing rates expenses. Separate from income statements in the fourth quarter of last year, we commenced construction and buildout of the dedicated manufacturing suite at Lonza to support the potential global commercialization of our PCV programs in connection with the agreement we entered into with them in October. We expect this buildout to take approximately 2 to 3.5 years at a capital cost over this period of approximately $300 million to $350 million. As of year-end 2023, we had incurred $86.5 million of capital and facility buildout expenditures that were reflected on our balance sheet in two separate line items, property and equipment, and other assets.
A detailed breakdown can be found in our 10-K filed today. For the remaining construction and buildout cost of this dedicated manufacturing suite, we expect the majority will be incurred in 2024 and the balance in 2025 and perhaps into early 2026. Most of the associated costs will be reflected on our balance sheet and the same July evidence I mentioned earlier and will not run through the income statements until buildout of the suite is complete and manufacturing activities commence. There will be a separate and smaller operating expense component over the buildout period that will be reflected within R&D expenses. Turning to the balance sheet and cash runway, as Grant noted, we continue to maintain a strong financial position ending in 2023 with $1.24 billion in cash, cash equivalents, and investments.
This excludes the $816.5 million in net proceeds from the follow-on month offering completed earlier this month. Going forward, we expect that our balance sheet will be sufficient to fund our operating expenses and capital expenditure requirements through a number of important milestones over the next few years, including the VAX-31 adult Phase 1/2 study top line data expected in the third quarter of this year. The VAX-24 infant Phase 2 study primary series and booster dose readouts expected by the end of the first quarter and year end 2025, respectively. The initiation of anticipated Phase 3 studies for the adults PCV program we elect to advance, which a VAX-24, would include the non-inferiority study in the second-half of this year and the remaining studies in 2025 and 2026 or if VAX-31, the full complement of studies in 2025 and in 2026.
The expected top line data from the Phase 3 pivotal non-inferiority study whether we advance VAX-24 or VAX-31, and the expected completion of the buildout of the dedicated manufacturing suite to support the long-term commercialization of our PCV programs. I will now turn it over to Grant for closing remarks.
Grant Pickering: Thanks, Andrew. Before moving to Q&A, I would like to acknowledge the entire team at Vaxcyte and our partners. 2023 was an extraordinary year of validation for VAX-24 and our pipeline. Over the next year we look forward to several upcoming catalysts that will further define the profiles of our PCV franchise and I am confident in our ability to execute and further scale our business in 2024 and beyond. We look forward to sharing further updates as the year progresses and I appreciate your interest by joining us today. With that, let’s take some questions. Operator?
Operator: Thank you very much, Mr. Pickering. [Operator Instructions] We’ll go first this afternoon to Jason Gerberry of Bank of America.
Jason Gerberry: Hi guys. Thanks for taking my questions. I guess, firstly, just as we think about this decision between VAX-31 and VAX-24, you’re ultimately measuring yourself against VAX-24. So wondering if you can kind of frame what success looks like? And in the end would showing kind of like a net incremental coverage of three or four strains as measured by statistical NI or good enough point estimates or a fourfold rise collectively across the spectrum. Does that sound like to kind of what a bar for success looks like? And then secondly, have you guys explored ways to reduce protein carrier in the 31-valent approach? And the reason I ask is, for some reason, if this iteration of VAX-31 doesn’t make the cut-off, just wondering if there are ways to potentially go back to the drawing board and to optimize. Thanks.
