Brickell Biotech Inc (BBI) 2013 Q2 法說會逐字稿

Good day and welcome, ladies and gentlemen to the Vical Inc. Financial Results Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers from the invited participants after the presentation.

I will now turn the conference over to Mr. Alan Engbring, executive director of investor relations. Please go ahead, sir.

Hello, everyone. Welcome to our second quarter 2013 financial results conference call. Participating on the call today are Vical's president and chief executive officer, Mr. Vijay Samant, and Vical's chief accounting officer, Mr. Tony Ramos.

I will begin with a brief notice concerning projections and forecasts. This call includes forward-looking statements, including financial expectations and projections of progress in our independent and collaborative research and clinical development programs, that are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks set forth in Vical's annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, as well as the specific risks and uncertainties noted in Vical's news release on second quarter 2013 financial results. These forward-looking statements represent the company's judgment as of today. The company disclaims, however, any intent or obligation to update these forward-looking statements.

Now I would like to introduce Vical's president and chief executive officer, Mr. Vijay Samant.

Thank you, Alan, and thank you to participants for joining the call this morning. Today we'll discuss the status and expectations for our key development programs, particularly a timing update on Allorectin and a detailed look at the recently started Phase III program for Transvax, which is renamed as ASP0113. We'll begin the call with a review of financial results by our chief accounting officer, Tony Ramos. Tony?

Thank you, Vijay.

We reported financial results this morning for the second quarter and first six months of 2013. Revenues were $3 million for the first 6 months of 2013 compared with $13 million for the first 6 months of 2012. The decrease in revenues was primarily a result of a $10 million milestone payment we received from Astellas last year for progress in the CMV vaccine program, previously known as TransVax and now called ASP0113.

Research and development expenses were $7.6 million in the first half of 2013 compared with $10.2 million in the first half of 2012. The decrease in R&D spending primarily reflects the sublicense payment we made in the first half of 2012 related to the Astellas milestone payment.

Manufacturing and production expenses were $7.6 million in the first half of 2013, compared with $5.4 million in the first half of 2012. The increase in manufacturing and production expenses was driven by increased activity related to the Astellas agreement. General and administrative expenses were $7 million in the first half of 2013 compared with $5.5 million in the first half of 2012.

The net loss was $19.2 million for the first half of 2013 compared with $7.6 million for the first half of 2012, with the Astellas milestone payment last year accounting for most of that difference. Our first half 2013 net use of cash was approximately $17 million, which was just below our first half forecast range of $18 to $20 million. We ended the first half with cash and investments of $70 million. We will provide guidance for the second half of 2013 net cash used after we analyze the financial implications of results from the Allovectin Phase III trial.

With that I will now turn the call back to Vijay.

Thank you, Tony. I'll begin today with a quick status update on our Allovectin program. We've been driving the development of this investigational immunotherapy for a long period of time, and everyone at Vical is personally and professionally invested in the outcome. If results are positive, Allovectin has the potential to become a first-in-class treatment alternative intended for our patient administration that local injection is designed to induce a systemic immune effect. We all hope for the best.

Our goal is to release the top line results during the month of August. Immediately after this conference call we'll enter into a self-imposed quiet period and will not be interacting substantially with the investment community until the top line results are released. As a result, we've cancelled our scheduled public presentations to the end of August. We appreciate your cooperation and understanding during this period and we look forward to the announcement of Allovectin results.

I'll now move to our other key development program, TransVax. In collaboration with our partner, Astellas, we announced in June the initiation of a pivotal Phase III trial in hematopoietic cell transplant recipients to support registration for CMV vaccine previously called TransVax.

Just a quick note on the name. Astellas has asked us to use their development name, ASP0113, moving forward. It's more cumbersome than TransVax but that's the name that we're going to use until it gets a formal name.

As a reminder, most HCT recipients are leukemia/lymphoma patients. As part of their treatment for the underlying cancers, their immune systems are essentially eliminated and the transplant of stem cells from healthy donors allows them to start rebuilding new immune systems. During the recovery period, before the immune systems are fully functional, these patients are at high risk for CMV and other opportunistic infections.

Just like the general population, more than half of these patients have pre-existing CMV infections, which is normally kept under control by a healthy immune system. We're only enrolling patients who are CMV seropositive as they're high-risk for CMV reactivation during their post-transplant recovery period before the new immune systems become fully functional.

CMV can lead to a variety of serious complications, including pneumonia, organ failure, and death. In short, these are very sick patients, and CMV seriously threatens their chance of success with transplant procedure. CMV reactivation in this patient population typically peaks within the first 100 days after the transplant procedure, so it's important to mount a sufficient immune response early in the recovery period and to sustain it until the new immune system is fully functional.

Our vaccine is intended to control CMV during this period of risk and thereby reduce or eliminate the need for toxic and expensive antiviral drug therapies currently used. By one year post-transplant, our plan follow-up period in this Phase III the new immune system typically is able to control CMV on its own.

When we started exploring primary endpoints for the Phase III trial, we focused initially on CMV (inaudible) or use of antiviral therapy. While these may be good indicators of patient benefit, they are considered surrogate endpoints. And based on the feedback from regulatory agencies in U.S., Europe, and Japan, we established that using these surrogate endpoints would only support an accelerated approval and would require a commitment to conduct a post-approval study.

We worked with Astellas to design a single Phase III trial with the primary endpoint that would support full approval in all key markets with no post-approval study requirements. Full approval requires a clinically meaningful endpoint. One clinically meaningful endpoint that has been used by others in the past CMV studies is CMV disease.

Before antiviral drugs were introduced in the 1990s to control CMV in seropositive recipients, CMV disease was the leading infectious disease cause of death among patient population. However, since the introduction of antiviral drugs, incidence among CMV-seropositive patients has dropped from 20 to 30% range to less than 5%. So while CMV disease is still is clinically meaningful, it's no longer a practical end point because it would require a huge trial to achieve statistical significance.

Other clinically meaningful endpoints include acute graft-versus-host disease, chronic graft-versus-host disease, and infections other than CMV. There are frequent complications among ACT patients and all are more common in CMV seropositive patients. In other words, CMV activation is a contributing factor, not the only factor, driving these complications.

Like CMV disease, these potential endpoints individually are not practical, as each would require a very large trial. Of note, however, that each of these complications were also associated with increased mortality among HCT recipients. Individually, the differences for each pathway may be small, but collectively the impact of CMV sero status and mortality is quite pronounced. Published data have typically shown 20% to 30% survival disadvantage for CMV seropositive and HCT recipients.

So CMV deactivation is linked to lower mortality and control of CMV reactivation with a successful vaccination strategy, logically would provide a survival benefit. Based on this logic, we have designed a Phase III trial with the primary endpoint of lower mortality in one year after transplant. The 1.1 randomized double blind placebo control trial will enroll 500 HCT patients who are CMV seropositive and will be stratified by donor recipients relatedness and donor CMV sero status.

To reduce the risk of conducting a large study with an untested primary endpoint, the Phase III trial uses an adaptive design with 100 subjects in the first part and 400 subjects in the second part. The main objective in the first part is to select the primary endpoint for the second part. We'll compare the overall mortality one year after transplant between vaccine and placebo groups in the first 100 subjects. We'll then calculate whether the statistical trend in the first part would reach statistical significance with an additional 400 subjects in the second part. If so, the primary endpoint will be the overall one-year mortality. If not, the primary endpoint will be a composite endpoint combining one-year mortality plus other relevant variables.

There'll be no break in involvement as we transition from part 1 to part 2. This prevents the disruption of stopping and restarting the trial or conducting two separate studies. The endpoint for the second part must be finalized before enrollment is complete. Using the primary endpoint established in the first part, the second part will evaluate efficacy in 400 subjects.

Astellas expects to complete enrollment for both parts of the trial by the end of 2015 or sooner, which will allow trial completion by the end of 2016. Separately, a planned Phase II trial with ASP0113 in solid organ transplant recipients is expected to begin later this year. We'll provide more details of the Phase II SOT trial, design, and the timeline when it begins.

In summary, we're very pleased to be working with Astellas, who have proven to be an excellent partner for the CMV vaccine program. We're excited to have a Phase III trial that's underway and we look forward to completing the process as efficiently and as quickly as possible.

I'll wrap up with some brief comments on a therapeutic vaccine for herpes simplex 2, which is designed to help control outbreaks and shedding in people already infected with HSV-2. More than 500 million people -- about one out of every five or six in the 15-to-49 age groups -- are living with chronic HSV-2 infections worldwide. So this represents a significant unmet medical need and a large commercial opportunity.

Most of these patients either do not have access to or do not effectively use antiviral drugs, which are the only treatment available at this point. We are advancing as scheduled to initiating a Phase I/II trial by the end of 2013 and will provide periodic updates on our progress as we move forward.

In our release this morning we confirmed our guidance for the remainder of the year. We are excited about the Allovectin program. We expect to share the top line results from both endpoints in the month of August. Astellas expects to initiate the Phase II trial of ASP0113 in solid organ transplant recipients later this year, and we'll provide details on the trial at that time. We plan to initiate a Phase I/II trial of our vaccine for HSV-2 by the end of 2013.

That concludes our prepared comments for today. Operator, we're now ready to open the call from our invited participants. Thank you.

Thank you, Mr. Samant. The question-and-answer session will begin at this time (Operator instructions.)

Our first question today will come from Ritu Baral, Canaccord Capital.

Hi, guys. Thanks for taking the question.

On the Allovectin trial, has anything -- as you finished the sweep, has anything change in your assumption for placebo survival? And as you enter statistics, what is your current assumption?

As we said, nothing has changed in our assumptions because a sweep is primarily involved in collection of data, so it should not have an impact on our assumptions for the control endpoint. We said the original assumptions, which are in the trial design, are 11 months for the control arm and 18 months for the treatment arm. We have said periodically that we believe that knowing what's occurring in the field, that number could be anywhere in the 12 to 14 month range.

And we feel very comfortable that if that being the control arm based on our prior Phase II data, the trial (inaudible). But it all will be unblinded very shortly so you'll be able to see it all when that occurs. But there are no changes in assumptions at this stage.

Got it. And for your CMV trials, what are the powering assumptions going -- what are the target powering assumptions for the trial? What are you essentially going to adapt enrollment to reach?

Go ahead, Alan.

Ritu, Astellas and Vical have agreed on certain things we will and will not disclose, and the powering assumptions are not something that we've agreed to disclose at this time. I can pursue that separately with them and see if we can add that before the next conference call.

I think there's a lot of competitive trials going on. Ours is a very unique endpoint. As you know, there are a number of CMV antiviral studies that are going on, and those are, if you go and look at the fine print, only based on accelerated approval. So this is one of the few trials which is based on pivotal approval, including, without naming the companies, recently (inaudible) CMV antiviral studies were all accelerated approvals.

So this is a very unique endpoint and trial design, which I kind of gave you a little bit of background on. It's been very carefully thought out with an expert group that Astellas and Vical used in the outside that helped us think it through very carefully. So there is some proprietary thought process that has gone into it.

And last question before I hop back in the queue. Have you had any recent interactions with FDA around the FPA that you still have in place for Allovectin?

You know, it's not our practice to normally discuss the interactions of the FDA. All I can tell you is that interactions with people always have been very productive. We deal with that branch of the agency (inaudible) and we continue to talk with them on a variety of fronts, including manufacturing issues. So this is an ongoing dialogue and we have a good relationship with the agency.

Great. I'll hop back in the queue. Thanks.

Next up from Credit Suisse is Lee Kalowski.

Great. Thanks. You know, Vijay, the last few quarterly conference calls you had given us the analogy of driving across the country. And I think where we last left off we were in central New Jersey. So I guess does this mean we're now in midtown Manhattan looking for a parking spot?

Well, we have just entered -- unfortunately, George Washington Bridge was closed, so we had to come through the Holland Tunnel and only one lane was open. It took us a little time but we are now in the city and heading -- we're in the southern section of Manhattan and we're right down the West Side Highway.

All right. So we're getting close. So I guess given that you had said Q3 and now you're able to narrow it down to August, can you just sort of give us an update for what you're seeing or where we are precisely that gave you the ability to narrow that down a little bit?

Well, the issue simply is that when you start predicting six months, you start predicting quarters, and as you start getting closer you get better granularity. The last thing you want to do is after having made so many changes in terms of the timing of it, to be so precise and say that I'm going to get this done in August six months ago and then blow it by one month and do it in September.

So our goal was to try to get it done as early as we could in this quarter, and so now we have much better granularity and we think that August is a doable date.

Okay. Does that mean all of the death events required have been reached?

You know, you're going got find out when we update all the data in terms of what the death events, what all the assumptions are. I think just look forward to it. I think at this point, in terms of whether we're going through granularity or what exactly we have accomplished in the company day by day, I don't want to take time discussing that.

Okay. That's fine. And then given that you'll be going into a quiet period, I guess just one last chance to get your thoughts as we think about a matrix of overall survival and response rate. I mean, obviously I guess there's only four outcomes, two of which are very obvious; sort of how you think about the two intermediate outcomes where maybe one endpoint hits and the other doesn't.

Well, it all depends. I mean, I know what you're saying; if we meet one and don't meet the other, we don't meet both. I think first of all the primary -- the most important endpoint is the result of what occurs in the landscape of survival. We have to beat survival. We have to show statistically significant survival. There's no ifs, ands, or buts about that.

And the rest of it depends on where you are with the trend, where you are with the numbers. So for me to speculate what the number's going to be -- because there's a lot of interdependency on what one number is versus the other number. So you're right in terms of your analytical thinking in terms of the two sections of the matrix. But within that, there are a lot of other possibilities.

So I think let the data speak for itself. And when the data comes out, we'll be able to comment on it. Obviously we'll have good experts working with us in terms of helping us interpret that data.

All right. That's fine. Have you said what P-value you need to hit to meet statistical significance?

No. We've not. Because as you just pointed out, there are two endpoints. We haven't set that yet.

Okay. Got it. I guess last question would be sort of as you think about the management structure -- and obviously you're out of the CFO -- are you waiting for the data to sort of make that determination and figure out what changes might be appropriate based on how the data looks?

Absolutely. I think with a successful outcome of the study, the organization will have to grow. There'll be strength in the organization on a variety of fronts, particularly in the commercial aspect of the organization. Having said that, Tony Ramos, who's sitting here, has done a superb job so far in the absence of our CFO.

Okay. Thanks a lot. Look forward to talking again soon.

Thanks.

Our next question is from Howard Liang with Leerink Swann.

Thank you very much. So given that you're able to give the protection of August data, so I would assume that the required number of events have been reached. So can you talk about whether you already have the overall response rate data?

No. I think as I told in the previous calls, the adjudication and the response data is in a separate database. The adjudication process was in the process of getting complete. We were doing a sweep and both those processes are converging.

What I don't want to do is go and tell you exact timing of what events are occurring when because we're almost four weeks before the end of August, so this is going to occur very shortly and you'll see all the numbers without speculating at this point in time.

Okay. And if, assuming there's a positive, what other indications would you consider developing Allovectin in?

That's an excellent question, Howard. You know, as we have said, if this therapy's successful -- and indeed the results meet what we expect them to be and it shows the kind of safety (inaudible) we have seen in Phase II, this is a generic vaccine for all kinds of solid tumors.

And as you know, we have said previously we have done earlier Phase I/II studies in head and neck cancer, where we have some early indication that it has some positive (inaudible). So that's a logical choice. Our partner in Japan, AnGes, actually has licensed Allovectin primarily for use in head and neck cancer. And this is also an opportunity for a new outpatient setting in melanoma. There is no therapy available for new outpatient setting for early stage II/III melanoma. You get only resections. If this is successful, you could -- obviously we'd have to do a small study to demonstrate the antigen, but you could give a couple of injections prior to resection so you get some immune activity going so there's prevention of the current and later stages. You know, most people get stage I/II melanomas taken off and 15, 20 years later the melanoma shows up. And this could be a powerful new antigen, assuming it works.

Okay. So big opportunity if it's successful?

As I've said previously, we have orphan drug status, we have fast-track status, and we have a lot of know-how in terms of how we make it.

Have you had any discussions or even had any work done with the other players working on therapy, either injectables or (inaudible)?

Excellent question. The question is whether we are contemplating any work to do on the new drugs, which are already on the market, or drugs which may potentially come to the market.

Let me tell you one thing, is that we are already demonstrated in animal models at least, there's a synergy between us and CTLA (inaudible), that CLTA (inaudible) and Allovectin combination works better than CTLA (inaudible). We intend to do similar studies using the PD-1 analogs, which are available. At this point in time, until our data is fully blinded and we are on the right track to get this drug approved, it's high-risk to put this in accommodation study to award any safety or adverse events.

But assuming the data's positive, we have a lot of accommodation studies which we have designed for human clinical studies. And once the data is out, we'll have all the right parcels lined up indeed to begin those studies in the near future.

Great. If I could just, on that last question, the ASP0113, the primary, if I heard it correct, was one year mortality after transplant, okay? What is --

Not due to CMV; mortality, period, not to CMV disease.

Okay. What is a typical rate of one-year mortality?

Yeah. If you look at the groups, as I said in my script, about -- say 20 to 30% death or mortality of CMV-positive versus CMV-negative patients, right?

Yeah. Howard, in our Phase II study, for example, we had in the placebo group 33% mortality in one year.

Okay. Thanks very much.

Up next we'll hear from Jonathan Eckard, Citi.

Hi. Thank you very much for taking the questions.

My first question is, the comment was we have to have survival; we must have survival. Could you talk possibly about what metrics of survival are feasible for what you believe the FDA could take or would be interested in or certainly are substantial or viable to your analysis of the program? And then I have a follow-up question about something in the pipeline.

I think -- I can't talk about what the FDA specifically is going to accept and not accept. But it's all going to be depending upon how the (inaudible) looks, what the median survival is. And obviously you're going to have to show statistical significance. You're not going to go to the agency without any statistical significance. That I can tell you without not being a part of the agency.

So what level or what strength in the statistical significance is required is subject to open discussion. But it's going to be the overall Kaplan marker, what kind of separation do you get in the curve. The agency obviously will have a lot of questions in terms of what post-Allovectin and post-placebo treatment these patients got, and we are prepared to answer those questions at the proper time.

They'll also be looking at what the one-year, two-year, three-year survival rates are, compared in both groups, versus what has been seen apparently in some of the approved drugs because there's not real-time data beyond the clinical trial on those drugs. So a variety of factors will go into it.

Great. It was really the later part, the one-year, two-year, three-year. And you're saying there are examples of drugs -- were there examples of drugs that have been approved on those metrics by (inaudible)?

Probably, if they are, because those one-year, two-year, three-year eventually get calculated into the hazard ratio, which is the overall difference between the Kaplan marker. And (inaudible), as you know, was approved basically on data which was on six months. Then there was a crossover allowed in the study. Then whatever data came out post-crossover was meaningful because when crossover occurred everybody got (inaudible).

So they limited data on which was approved on a very early read on that study. So the agency has done a variety of things. So everything is on a case-by-case basis. You're to look at the overall drug, how it's administered, what the safety profile is, what the efficacy profile is, and all those put together, where does it fit in the value proposition, and is it a therapy which is unconventional compared to what's available? Are there synergies with the therapy other than theoretical? All those will be taken into account as people think about it. But you know, I can't speak for the agency.

Okay. And then regarding the pipeline, unfortunately the (inaudible) trial were negative. What do you foresee as the first couple of events that could really highlight the remaining value of the pipeline assets that are in Vical's pipeline?

I think the ASP0113 study, it's a fine (inaudible) study. We'll be actively engaged in it. The entire money for that study is being spent by Astellas. We'll be providing all the material towards it. It'll be followed by a solid organ transplant study that'll be done, which will happen the second quarter.

We also have our HSV-2 program, which is going to be starting very shortly. Subsequently we also have CyMVectin, which is somewhere sitting in R&D. We are waiting for some guidance from the agency on target endpoint, and it's a study that we can immediately start, a proof of concept study in 200 patients. And then we have some licensed programs to the Navy and others, and dengue and malaria.

And don't forget; I keep on reminding them. We are doing a lot of work on an antigen (inaudible) with a variety of people. And there's some other things we're thinking of which we'll have to discuss publicly if the eventuality of what you describe happens. But we feel good about how the Allovectin study has gone so far, so let's think positive.

Very good. Thank you very much.

Up next from Stifel is Stephen Willey.

Yeah, hi. Good afternoon.

So Vijay, just to clarify then, we will be getting the one, two, and three-year survival rates in addition to the median when you guys report out OS in August?

We are to be careful what exact data we're going to release because we -- obviously if the data's good we want to make sure we publish the data within the bounds of what we can publish with good scientific journals. So if the data is really good, we want to make sure that you'll get sufficient (inaudible) of the data that you get excited, but not baring the kimono without presenting it at conference or getting it published simultaneously. So we are a little bit under the gun right now, unfortunately.

Because if this was an (inaudible) kind of timing but I managed it well. So I don't want to kind of commit to at this point what we will present. In a matter of weeks or months we'll be publishing the whole data. Right now we'll give you the top line data, which assuming the data is good, will get you excited.

And I guess I'll just ask the question because I know some of the other immunotherapy products we've seen in melanoma have kind of generated non-interesting/enthusiastic medians but have generated some fairly provocative tail data. So I guess that's just why I'm asking the question because I think it kind of is important to our ability to interpret what the OS data means.

It is. The one-year, two-year, three that you folks talk about, you need to understand that if I'm going to give you an overall fee value on the curve, that's an indication of the entire Kaplan marker curve. That takes into account the tail. It's not the median survival numbers which are important.

So the hazard ratio that you get works across the entire curve if it captures the one-year, two-year, three-year survival data. I think the hazard ratio is going to be very clear.

Okay. And then as it pertains to the Astellas program, I think there was a question previously with respect to what you're going to be able to disclose or not disclose. But will you be able to at least characterize the pace of enrollment going forward?

I think so. I think it's -- as most companies don't give you exactly patient by patient as to the way they are, but I'm sure Astellas will provide guidance on a quarterly basis, the progress they're making, at least in terms of where the end point is.

You know, they're savvy people. They know the transplant market. They have the largest-selling drug in the transplant setting, PROGRAF. And they know all the transplant centers. Obviously there's competition out there, but I think they're going to be recruiting across several centers in U.S., Europe, and Japan, so they should be able to recruit pretty rapidly.

Okay. Thanks.

Next we'll hear from Katherine Xu, William Blair.

Hello. Good afternoon. Couple questions, if I may, Vijay.

For the CMV study, so it looks like CMV (inaudible) is correlated with overall survival; just curious whether it is causal as well. And also, what is the FDA's attitude on a moving endpoint?

Oh, this is all being -- one of the reasons it has taken us so long to get this trial going is we had some experts in an after-trial design, some top-notch statisticians that (inaudible). There's been back-and-forth discussion with the agency. So this is not something that we have proposed. This has been fairly well-discussed with the agency; the agency understands the after-trial design and new concepts that companies are using.

So no, this is not something that we (inaudible) said, okay, this is it, and we are moving forward with the trial. The agency always, as you know, reserves the right to give you permission to start the trial, thought they don't always exercise it. But they can tell you that. And we had a (inaudible) along with Astellas, kind of extensive discussions with both European agencies, Japanese agencies, and the FDA. So the answer is yes, they are very (inaudible) to what we are doing here.

Obviously the one important point that I made in the script, that we have to decide on the endpoint for the remaining 400 patients before the enrollment of the 400 patients is complete. That's important.

Right. Is it because OS is a powerful component of the endpoint? So it could be OS, it could be a composite OS test for a couple other things. So those couple other things are quite indeterminate. Is it because OS is such a powerful endpoint, therefore (inaudible) couple of things (inaudible) kind of nebulous (inaudible)?

The first hundred patients will tell you. You need to look at our Phase II study. We did a small study in about 80 patients, and you take a look. The 80-patient study (inaudible) show statistical significance. But if you look at the trends in the study you can (inaudible) that if we have 200, 300 patients who have reached survival difference between both the groups.

So 100 patients in the study, we should have sufficient power to predict that. You don't have to reach statistical significance with that 100 patients. All you need to say collectively (inaudible) that the trend is going and then we decide that we're going to stick to that endpoint. But the agency has given us, that at that point if we decide that we want to change from that endpoint and add something else to it to make it a composite endpoint, they're okay with it.

And the CMV section is correlated with overall survival? I'm just curious. Is evidence strong that --

Yeah. You know, offline I'll send you some papers that have been published on that subject matter.

And then on Allovectin, I guess you asked this before, but this is sort of the final stretch here for a while, a long time. And then during the most recent months while you were collecting data, studying data, going through the adjudications, watching from the side, anything on the conduct of the study? Any update or thoughts or has been consistent, as in (inaudible) that makes you feel comfortable?

Yeah. I think so. I think we had, as I said -- I don't know that we said that -- we had an expert group kick tires a couple of months ago in terms of the execution aspects of the study in a blinded fashion. Without getting into the execution, you don't need to unblind the study to look at, kick tires. And people who have conducted large studies who are not familiar, who are not clinical investigators, and they thought that the conduct of the study is pretty solid obviously in terms of way we have conducted the study.

Compared to some of the things that we hear by horror that's on some companies when they disclose their studies, we've gone through, as I've said previously, the study's not a study that's primarily enrolled in eastern Europe or something like that. We don't have one single center which is predominant. The study's conducted in rural sites in the United States; select countries in Europe. Israel has been a big recruiting center for us; Brazil. We are not in Australia.

And I think everything that we have done seems on the right track. I personally don't have any concerns, but until you unwind the data, you don't know what you're going to find out.

Okay. All the best. Thank you.

Thank you very much.

(Operator instructions.) Up next we'll take a follow-up from Ritu Baral.

Thanks for taking the follow-up, guys.

Vijay, can you remind us again the status of CMC for you guys -- for Allovectin? Sorry.

First of all, Allovectin, just to give you a little bit of background because the people still get confused, it's not patient-specific therapy. It's made by a very simple fermentation process and two purification steps. So it's a well-characterized biological, so you don't have to do bridge clinical studies or anything between the Phase III process and the commercial process.

We are in progress with the conformance runs, both on the bulk side and the finish side and everything so far. The only difference from the Phase III in place or in the Phase III, the drug was actually still at Vical. In Phase IV we are using a contract manufacturer to fill the drug. But the fermentation and the bulk drug is still produced here, which is really the key issues in any manufacturing.

We've been working with the agency on CMC issues for the last 12 years, including stability (inaudible), raw materials specs, product characterization. I think our interactions -- somebody asked, do you have any interactions with the agency? We have interactions with the agency on CMC issues continuously for the last several years and we have slowly and progressively taken care of all the issues that the agency wanted to take care of.

So I think we feel very comfortable on the CMC aspects of it. Obviously we have to get the right stability data and everything. The devil is always in the details, but there are no showstoppers that we see at this stage.

Got it. And can you -- will you be taking any sort of an alpha hit for the interim in the CMB trial, either from the FDA or Europe or Japan?

No. There is no -- see, that's the beauty of the (inaudible) design. Those 100 patients are not calculated. The only number that's used in the calculations is the 400 patients. If you're conducting two trials, this process allows you to do continuous one trial and take a quick sneak at the first 100 patients. But the data is going to be based on the 400 patients in terms of the statistical calculations. There is no alpha hit.

Got it. Great. Thanks for taking the follow-up.

Thank you.

We'll now take a call from Lee Kalowski, Credit Suisse.

Great. Thanks. Appreciate the opportunity to follow up as well.

Just very quickly, I think the late-breaker deadline for ESMO is August 7th. If that isn't met, do you have a sense for what the venue might be for the full data?

That's something we're debating right now. No. The answer is no, we don't have. And that's why -- more than the venue, I think the important part as you know -- and you can talk to all the big guys -- is you've got to get it published in the right journal so it gets the right publicity, so it gets across rural and colleges who need to really find out. And they find out more from the journals.

Obviously ESMO and ECCO are cherry on the ice cream, or whatever you want to call it. But we'll find a venue. I think key thing is getting the data right and then getting it published properly.

All right. Thanks.

Ladies and gentlemen, that does conclude today's question-and-answer session. I'd like to hand things back to Mr. Samant for any additional or closing remarks.

Thank you all for participating. As a reminder, beginning immediately after this call, Alan and I and the company will enter into a quiet period. We'll not be interacting substantially with the investment community until we release the Allovectin top line results. Again, we appreciate your cooperation and confidence in this company. Thank you.

And ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation today.