Novavax Inc (NVAX) 2004 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Novavax, Inc. third quarter earnings release conference call.

At this time all participants are in a listen-only mode.

Following today's presentation, instructions will be given for the question-and-answer session.

If anyone needs assistance at any time during the conference, please press the star followed by the 0 for an operator.

As a reminder, this conference is being recorded today, Thursday, November 4th, 2004.

I would now like to turn the conference over to Ms.Leslie Loyet with the Financial Relations Board.

Please go ahead, ma'am.

Thank you.

Good morning and thank you all for participating in the Novavax, Inc. third quarter conference call and webcast, which will provide a detailed update on the Company's vaccine business and new business development pipeline.

By now you should have all received a copy of the press release.

If anyone still needs one, you can call our office at 212-445-8300 and ask for Samantha Alfonzo [ph] and we'll fax one to you and send one to you immediately.

In conjunction with today's conference call and webcast there is also a slide presentation.

The slides can be accessed through www.company boardroom.com, as well as Navavax's website at www.novavax.com.

On the home page, just scroll down and you will see it.

The slides are user controlled so you can move through the presentation when prompted by management.

With us today from management is Nelson Sims, President and Chief Executive Officer;

Dennis Genge, Vice President and Chief Financial Officer;

Special Guest, Dr. Gale Smith, Vice President, Vaccine Development;

Dr. Rahul Singhvi, Vice President, Pharmaceutical Development and Manufacturing Operations; as well as Ford Lynch, Senior Vice President Sales and Marketing; and Dr. Denis O'Donnell, Chairman.

Before we start, the Company has asked me to remind that you forward-looking statements can obviously differ from actuality.

And relying on them is subject to risks.

Factors that can cause forward-looking statements in this conference call webcast to differ materially from actual results discussed in the Company's Form 10-K and other periodic filings with the SEC.

So at this time, I would like it turn the conference call over to Nelson Sims.

Please go ahead, Nelson.

Thank you, Leslie.

Good morning and welcome to the Novavax third quarter 2004 conference call.

Our agenda for today's call can be viewed on slide 3 for those of you following the webcast.

I will first review milestones reached during the third quarter.

Second, Dennis Genge, Vice President and CFO, will highlight our third quarter financial results, And third, as promised on earlier calls, you will have the opportunity to hear from 2 distinguished members of our management team, Dr. Rahul Singhvi and Dr. Gale Smith.

Rahul will provide us with an up-to-date progress report of our drug delivery portfolio utilizing our proprietary micellar nanoparticle topical delivery system.

Next, Gale will report to you on the significant progress we've made with our vaccine technologies, including our new genetically engineered flu vaccine.

During our October 21st conference call, we highlighted several of our more significant accomplishments during the past 12 months.

Slide 4 on the webcast outlines those major milestones accomplished during the third quarter.

First, our ESTRASORB launch is well underway with steady improvement in sales results.

Second, sales force expansion is on track to improve our competitiveness for ESTRASORB.

Third, we filed a CBE 30 for our new high-speed, high-volume packaging equipment for ESTRASORB packets.

This initiative will reduce our manufacturing costs significantly.

Fourth, our progress is on plan with an ESTRASORB bottle project, another package offering additional choices to our customers while further reducing our production costs.

Fifth, our strategy to reduce the number of Novavax facilities and improve our operational efficiencies was significantly advanced during third quarter.

We closed our Columbia Maryland facility, we down-sized one of our Rockville, Maryland facilities with the eventual closing and planned for the end of the first quarter in 2005.

And we moved the corporate headquarters to Malvern, Pennsylvania.

All drug delivery operations are now located in the greater Philadelphia area, while vaccine technologies are located in a single facility in Rockville, Maryland, very close to the NIH and the FDA.

We expect our facility costs to be reduced by $15,000 per month, a significant savings for Novavax.

Sixth, we continued to strengthen our senior management team with the addition of Dr. Stephen Bandak, Vice President, Clinical Affairs and Quality Systems.

Seventh, importantly, we concluded the reacquisition of the worldwide rights for ESTRASORB and ANDROSORB and we eliminated the onerous terms of our agreement with King Pharmaceuticals.

The King transaction also served as a catalyst to surrender 40 million in convertible notes and eliminate the changing control restriction.

Our financing associated with the King transaction allowed us to reduce our debt by $5 million and add 23 million to our treasury.

I cannot begin to express the importance of this strategic initiative.

Although it has been challenging to tactically implement during the launch of ESTRASORB, the transaction must be viewed as one of, if not the single most important event in the history of Novavax.

And eighth and finally, we made great progress in the research and development, which will be covered by Rahul and Gale.

Since we reviewed in detail many of our past accomplishments during the October 21st call, our plan today is to really focus on what I consider to be Novavax's greatest asset and that is our pipeline.

Let me now turn the microphone over to Dennis Genge to review our financial highlights for the third quarter and year-to-date.

Then we will quickly transition to Rahul and Gale to review our pipeline.

Dennis?

Thanks, Nelson.

And good morning, everyone.

Today my comments will be very brief, as Nelson has said, the real story for the call today is to introduce you to the great opportunities we have in vaccine and pharmaceutical research and development.

For today there are basically 4 key points that I do want to highlight about our third quarter results, which are bullet pointed on slide number 5.

First, as mentioned in our conference call 2 weeks ago, we have decided to take a $1.3 million one-time charge against our legacy vitamin products.

This one-time charge is one of the results of a strategic initiative with our major wholesalers to better control and understand our respective product flows and inventory management systems.

Those systems are now in place, within the future, should result in more accurate matching of product sales to prescription demands.

Secondly, what may not be clear in the financial statements is that we did have gross product sales of 1.2 million for the quarter, which included 259,000 for ESTRASORB and close to 1 million for our legacy products.

In the financial statements, however, these sales were offset by the reserve, which was charged against those product sales resulting in a negative number for the quarter.

For the fourth quarter, based on current product prescription data, and wholesaler inventory information, we expect all product lines to show increased sales.

The other major nonrecurring item we have in the quarter is an $11.2 million gain on the redemption of the $40 million of King notes in July.

This gain, which was based on the independent evaluation of the notes, is grouped within operating expenses.

Finally, a quick look at our balance sheet.

As a result of the King transaction, and related financings in July, we have significantly strengthened our balance sheet.

Since the end of the second quarter, we have increased our cash position to 27.5 million, reduced our debt by 5 million and increased our stockholder equity by over $20 million.

For expanded details and discussions on our quarterly performance, please refer to today's press release, refer to an expanded discussion on our 10-Q which should be available no later than Monday or just give me a call.

Now I can't think of anyone more capable or deserving to kick off our R&D presentation than our chairman, Dr. Denis O'Donnell.

Thank you, Dennis.

As Nelson likes to refer to me as the Company historian, as many of you know, I've been with the Company and it's parent since 1991 with no Novavax since 1995 when it was spun off.

And today, as I view the Company and meet with the scientists, I have never been more excited about Novavax in the history of our operations.

This is truly a historic call today in which we're going describe to you the essence of Novavax, what we are designed and charted to be.

Novavax was spun off in 1995.

Our charter was to be a drug development and drug delivery company, and to accomplish this through our proprietary platform delivery systems.

We started originally with our NovaZone technology and lately have been featuring our proprietary micellar nanoparticle transdermal delivery systems.

We focused initially on ESTRASORB as a result of limited money and manpower, we took the appropriate approach to take 1 product, put it into our system and develop it.

What did we learn through ESTRASORB?

We learned how to put a product in the appropriate formulation.

We learned how to successfully develop that product through the FDA, preclinical and clinical Phase I, II, III, regulatory system.

We got the product approved.

We built a manufacturing facility that was both FDA approved and was able to produce a product in commercial scale.

Now that ESTRASORB has been approved and launched and launched through the efforts of Nelson Sims and his staff, who have come in, launched the product and are in the sales and marketing mode of it, we are now able to focus on the future of this Company, which is clearly where the value of this Company lies.

And that value is being able to take multiple products in both the pharmaceutical and biologic arenas, put them through our platform delivery systems and to be able to get those products through the FDA pipeline and into commercial development and sales.

We have brought in several senior management position people at Novavax to run this machine.

Recently we have announced that we have hired Dr. Stephen Bandak as our Vice President in Clinical and Regulatory.

Dr. Bandak has over 25 years of pharmaceutical experience, specifically in the clinical and regulatory development of human pharmaceutical products.

Dr. Bandak's job is to get the products that come out of the machines, that Dr. Singhvi and Dr. Smith are operating in the pharmaceutical and biologic areas, Dr. Bandak will take those multiple products, bring them into and through the human clinical development process.

With us today, starting out with the description and discussions of the pharmaceutical division of Novavax, is Dr. Rahul Singhvi.

Dr. Singhvi has a masters and a Ph.D in chemical engineering from MIT and an MBA from the Wharton School.

Dr. Singhvi comes to Novavax with 10 years experience in manufacturing and product development from Merck.

As you hear today, the Novavax development machine in both pharmaceuticals and vaccines is manned, it's running, and it's producing product candidates at an astonishing pace.

With this I'll turn it over to Dr. Singhvi and let him tell you about the exciting product candidates that he's developing in the pharmaceutical arena.

Rahul?

Thanks, Dennis, and good morning, everyone.

Today I'll describe our plan for leveraging Novavax's patented drug delivery technologies to create proprietary products in multiple therapeutic categories.

I hope to show you our product development strategy, the progress we have made thus far and our latest pipeline.

Let me begin with my first slide, which is slide 7 on the webcast.

The purpose of this slide is to emphasize the essential role that product development will play in Novavax's growth strategy.

This is a critical slide and as Denis said, it captures the essence of Novavax's pharmaceutical business and it's worth spending some time on it.

It shows that Novavax's growth is driven by new product development, which is [inaudible] in our patented micellar nanoparticle drug delivery system.

We are referring to this technology as MNP technology because I'll be talking about it multiple times in the remaining part of this presentation.

For those of you who are not familiar with this technology, this technology facilitates the delivery of drugs into systemic circulation upon topical application of a cosmetic-like lotion.

It's almost like a needle-like delivery mechanism.

I have spent a lot of time since coming to Novavax studying this technology and I'm quite impressed with the simple elegance and broad applicability.

I believe that we can create MNP-branded products using the technology that can seed and grow our commercial operation in the women's health space and at the same time, create opportunities to partner with other companies with compounds in other therapeutic areas.

On the partnership side, we have a 2-pronged strategy for product development.

We can either take multi-source drugs and put it in the MNP formulation and create a new MNP brand that is protected by the formulation patent.

Or we can partner with companies to help them with their products lifecycle management.

This will be the case if the company's patent on a particular drug is about to expire, we can help them extend the products -- the patent with our patented dosage form.

The bottom line is that there are multiple strategies for us to capitalize on this technology.

I want to make 2 more points before leaving this slide.

First, I hope it is obvious to you that Novavax has a much broader scope than just ESTRASORB.

The second, I hope it is clear why our efforts in communications in the recent conference calls have focused on ESTRASORB.

Making ESTRASORB into a commercial success is a priority for us for the obvious reason that we need the cash.

But equally important are the strategic reasons.

As Denis pointed out, the creation of ESTRASORB validates the products based on this micellar nanoparticle technology can be manufactured reliably on a large scale, that they are stable for multiple years at room temperature, that such products can be approved by the FDA and that consumers will ultimately accept them in the marketplace.

This validation makes a compelling case for the prospects of new products based on this technology.

Let's get into what we're doing about product development on the next slide, which is slide 8 on the webcast.

This slide shows the process that we use to identify suitable drug candidates to formulate micellar nanoparticle technology.

We have developed a comprehensive and rigorous selection process that consists of technical, clinical, regulatory and commercial criteria.

First we look at the physical and chemical properties, such as solubility profile of the drug, to assess the probability of creating a reasonable MNP formulation.

We then ask the question, whether there are compelling clinical or regulatory reasons to create a [inaudible].

Examples here would be elimination of substantial [inaudible] or a GI side effect.

Finally, we look at the commercial factor, such as market size and competition.

If the candidate passes these criteria, we then put it in our development engine, which I'll go through in the next slide.

If you are following the webcast, we are on slide 9.

What we have selected, a set of target molecules, the next question is, how do we create the most value for each incremental dollar that we spend in development?

Here it's worth looking at the drug development value chain as it pertains to Novavax.

As you know, we are not in the drug discovery business.

So we begin our target selection from the universe of safe and [inaudible] drug compounds.

After selecting the right candidate, the next steps are a series of preclinical steps that include solubility testing, formulation optimization, stability testing and testing the formulation on animals through assess drug permeability and blood levels.

This is followed by testing the product in human clinical trials and ultimately culminating in the regulatory filing to obtain marketing approval.

We have demonstrated with ESTRASORB that we have the experience in the Company to address each step of this value chain successfully.

But as we move forward, should we take the product to the entire value chain or should we bring the product to a certain stage and shop for partnership?

I get this question quite a lot and I have given it a lot of thought.

What I have found and what is so exciting about our business model is that the key risks of whether or not we will be able to create a product lie in the early part of our value chain, which happen to be the least expensive.

Let me expand on this for a second.

As opposed to discovery of new chemical entities, our risks are not in the safety and efficacy of the compound because we begin with drugs that have already been proven to be so.

Our key risk is whether we can create a formulation that is stable and can deliver the right amount of drug in the systemic circulation upon topical application.

And we can get that answer by testing blood levels in animals and confirming the results in Phase I human clinical trials.

Once we prove that our delivery vehicle can provide enough systemic absorption, the likelihood of becoming real product becomes very high.

We believe that when a product reaches this stage of development, we produce most of the risks and created enough value to initiate discussion with outside parties for co-development, co-marketing or licensing deals.

We believe that it is best to bring as many products to this stage of development rather than spend all our resources taking 1 drug all the way.

This is a deliberate change in strategy and it makes sense, now that we have proven with ESTRASORB that MNP derived products can be approved and are accepted in the marketplace.

My charge has been to create an efficient product development engine that can formulate multiple drugs for [inaudible] and demonstrate blood levels in humans.

I am very excited about this prospect and I am happy to report that we are well underway in putting this product development engine in place, and the next slide will show you the results that we have achieved so far.

This next slide, which is slide -- I think it's slide 10, is this 10?

Slide 10 on the webcast, shows the product pipeline that we are building from the product development engine we are putting in place.

In the women's health arena, the next product after ESTRASORB, which is furthest along in development is ANDROSORB, a topical testosterone lotion for female sexual dysfunction.

As you know, testosterone for females has gotten a lot of publicity recently with PNG's [ph] new testosterone packet, in [inaudible] that is currently being reviewed by the FDA.

There appears to be huge medical need in this area and we believe that we can affectively differentiate our lotion against the patch and compete in this large therapeutic space.

ANDROSORB has competed Phase I clinical trials and we have demonstrated excellent systemic absorption of testosterone in humans using our topical lotion.

We are in discussion with potential partners for further development of this product.

The next product that is farthest along is NX-200, which is our topical progestin indicated for prevention of endometrial hypoplasia in post-menopausal women.

This product is in preclinical development and has completed formulation optimization.

It is in long-term stability studies that look extremely promising.

The next product is NX-201 which is our topical contraceptive.

We are very excited about the prospects of this product.

Our early market research shows that a cosmetic like birth control product would be highly attractive to the younger women in the child-bearing age.

As you might know, [inaudible] options in the birth control area are rapidly becoming the preferred option.

This is clearly shown with J&J's Ortho Evra patch, which was become a very successful product in a matter of a few short years.

I believe Ortho Evra sold about 400 million last year.

Again, we believe that a cosmetic lotion could be differentiated and could compete well in this space.

Finally, in the women's health business, we have product NX-205 which is a large non-hormonal product that we previously called product A. This is potentially a large product and is in very early preclinical stage.

It's a new product that has never been used in a [inaudible] formulation and we hope to talk more about it in the months to come.

Let me move on to our pipeline of licensable candidates.

With regard to creating MNP brands for multi-source drugs, we are exited to announce today that we have recently completed formulation studies on the [inaudible] Fentanyl and preventative stability on this drug looked pretty promising.

In previous conference calls, Nelson has referred to this product as product B. Let me give you some idea of the potential of Fentanyl-like lotion -- a Fentanyl lotion-like product.

As you know, Fentanyl is the active drug in J&J's duragesic patch which sold almost $1.7 billion last year.

We believe that a lotion-like product with sustained release characteristics will give further options to patients with severe pain.

For example, due to cancer.

We expect to see some animal data shortly and we hope to talk more about Fentanyl in months to come.

In addition to Fentanyl, we have formulated 3 more non-hormonal drugs, NX-301, NX-302 and NX-303 which happen to be in 3 different therapeutic categories.

All these are in early preclinical studies and we will be speaking to you about these in greater detail in future conference calls.

On the patented drug end, I can report to you some preliminary work we are doing with a major pharmaceutical company.

This company has provided the patented drug to us to formulate in our MNP formulation.

We call it NX-400.

We are excited about the prospects of creating a novel dosage form of this drug, and again, we will speak more about it as we get more data.

I hope that not only have we developed a solid product development strategy, but we have begun to execute the strategy aggressively with laser-like focus.

I want to end my presentation with my last slide, which is slide 11, which shows a summary snap shot of our product pipeline.

Nelson has used this slide in his previous presentations and for those of you who have been following it, I would like to bridge some of his earlier presentations with the update I am giving today.

I would like to make 3 key points.

First, on our projected product, our contraceptive product and our product NX-205, formerly known as product A, we have progressed from solubility to the stability state of preclinical development.

Second, we have disclosed to date that we have a Fentanyl product in development.

This was formerly known as product B. Finally, we have added 3 new compounds to this pipeline, NX-302, NX-303 and NX-400.

In summary, we are extremely excited that we have multiple choices to move several of these product candidates into human clinical trials by the middle of next year.

I hope my presentation has given you a comprehensive view of the exciting delivery technologies that we have and our strategy for leveraging them in several multiple -- several therapeutic areas.

With that I'll pass it back to Nelson.

Thank you, Rahul.

We will now turn our attention to the vaccine technology research and development group here at Novavax.

Dr. Gale Smith, Vice President of Vaccine Technologies, joined Novavax in January of this year.

Gale is a recognized authority on vaccines and a co-inventor of the vacula [ph] virus insect cell expression technology system.

Gail's invention coupled with Novavax's functional virus-like particle technology serves as an important role in our recombinant DNA flu vaccine program.

As you may know, this technology has received significant interest as an alternative process for manufacturing influenza vaccines.

For those following the webcast, I direct you to slide 12.

As the slide indicates, what in the world is wrong with this picture?

The photo on the right was taken almost 60 years ago.

And it is sad to think that today's flu vaccine program in this country relies largely on the same process as in the '40s.

That is, a process requiring 100s of millions of eggs for each flu season.

Many manufacturing steps that are difficult to automate and a process that is so subject to contamination.

In addition, the process is slow, it requires 6 to 9 months lead time to respond to shortages or a new flu strain.

And of course, there are also allergies associated with egg protein, and in addition, most of today's flu vaccines contain thimerosal.

Gale, with that as an opening, coupled with this year's frightening flu vaccine shortage, I think you have our attention.

Thank you, Nelson.

It's a pleasure to be here.

If the vaccine technology that we are developing is as promising as it looks, and as our Chairman has said, this could be historical for Novavax.

We have developed a way to make vaccines that take advantage of the speed, the safety and the precision of DNA technology to make what look like viruses and interact with cells like viruses and stimulate the protective immunity like viruses, but will never cause infection.

We have used this genetic engineering approach to make a new kind of flu vaccine and I'll describe the exciting results from the government has given us in testing this in an man Al model.

As Nelson has said, in the past 4 or 5 years, we have seen increasing problems with the capacity, the difficulty in making flu vaccines from the right strain, strains that are in the community, lower protection rates and this year's flu vaccine being contaminated from one of the manufacturers.

And I just heard now that there's a shortage of the mercury free flu shots for infants.

It is human nature for us to fear more of the unknown than the familiar foe like flu.

But it's responsible for seasonal attacks causing an average of 36,000 deaths and 116,000 hospitalizations and $10 billion a year or more in healthcare costs in this country alone.

If you could turn to slide 14.

It compares the traditional complex process for making flu vaccines in millions of eggs each year with viruses that can both replicate or reproduce themselves in eggs, as well as in humans from the strains that are found circulating in the community.

In contrast, we have developed a much simpler technology for making flu vaccines in weeks instead of months by taking from the -- by taking from the influenza, the important genes and programming them into our insect cells and growing and producing the vaccine in our bioreactors.

The next slide is slide 15.

It illustrates the process for making what we call virus-like particles or flu and these essentially could be made for any virus.

Scientists at Novavax filed a patent in June of last year on a way to rapidly identify clone or synthesize influenza genes, then combine certain of these genes to program our insect cells.

The insect cells then make high levels of these flu proteins.

These structural proteins self assemble and are secretive from the cells and are virtually identical to influenza.

We call these functional influenza virus-like particles or just simply VLPs.

VLPs are never alive.

So they don't need to be killed.

They contain none of the 8 genetic segments normally found in influenza and so it is medically impossible for them to ever cause infection.

In fact, the only linkage between a VLP vaccine that we're manufacturing in Novavax and what was in somebody's nose or throat is a computer file with a DNA sequence of these genes.

When used as a vaccine, VLPs look like flu viruses, interact with cells like flu viruses, and like a whole virus vaccine, example, enlist a protective immunity.

The next slide, which is 16 is a picture on the left of flu viruses and on the right are purified flu VLPs made at Novavax.

Structurally, flu viruses and VLPs are very similar in size.

They have the same key proteins on the outer envelope and they have the same internal matrix protein.

However, the real flu virus is infectious and as I've said, our genetically engineered version is just a reflection of the real thing and has no flu genes and is not infectious.

Slide 17.

We have a pandemic flu vaccine program that is being funded in part by the NIH to develop a vaccine against one of the avian strains of flu that when transmitted from poultry to man have been lethal in about 75% of the confirmed cases.

Novavax scientists clone the genes from an A Hong Kong strain of one these flu viruses in the CDC's high containment laboratories.

We then brought these genes back to Novavax, cloned them into our production system and made the VLPs and formulated the vaccine.

This vaccine was then back to the CDC for testing in their animal models.

The findings that the -- that they just reported to us last month was that our VLP vaccine was safe, produced excellent levels of what are called functional anti-bodies in all of the immunized animals at levels that are known to be protective in humans and blocked replication in the lungs of the immunized animals.

Next slide shows an example of some of this data.

For 5 days after challenge with this highly pathogenic A Hong Kong flu virus, there were still high levels of virus in the lungs of the control animals, but little or non-detectable in the lungs of those immunized with our vaccine.

This flu program is obviously a very high priority for us now, but I wanted to briefly bring you up-to-date on the other clinical programs at the vaccine division.

There are plans to enter clinical trials in '05 or '06 of an AIDS VLP vaccine being funded entirely by the government.

We also have a contract to make a melanoma vaccine that the NCI wants to start Phase I trials as soon as we can deliver and we're producing that for them now.

We have another program with a good deal of potential, that's under statement, and it's based on a recombinant form of the human protein E-Selectin.

We are making a nasal spray that would be given in daily doses, low doses and administered to individuals over several weeks who are at high risk.

In animal models, this can induce tolerance to E-Selectin and prevent triggering inflammatory responses.

NIH plans to run 2 clinical trials next year, a Phase I trial to test each selection -- each Selectin for the prevention of strokes and a Phase II-A study to measure for reduction in heart attacks and both studies are in patients that are high-risk of secondary attacks.

Several years ago we made an hepatitis E vaccine for GlaxoSmithKline that has now finished Phase III trials, and should they commercialize this, we would receive some small royalties.

We plan on testing our human flu vaccine, both for the one that would be used annually and a prototype pandemic flu vaccine for safety and perhaps efficacy Phase I and Phase II trials within the next 12 months.

From a marketing standpoint, a genetically engineered flu VLP vaccine that could be delivered early in the flu season could be very competitive.

Being the first to market is an important advantage.

Where orders for flu shots are often from whatever company has the flu vaccine first.

Our flu vaccines have gotten the attention from several large pharmaceutical companies and the government and we are currently exploring development and licensing opportunities for these flu vaccines.

With that I'll turn it back to Nelson.

Thank you, Gail.

In closing, I hope you agree with me that the real value in Novavax is indeed our pipeline.

It clearly is what attracted me to Novavax a little over year ago.

We truly have a magnificent opportunity to create a robust portfolio of high-value products using our topical drug delivery system, plus have another exceptional opportunity to make a significant difference in the world of vaccines.

Each opportunity offers value to both patients in need and to our shareholders.

In closing, I would like to set forth several milestones for you to watch for in the coming months.

First, with regard to ESTRASORB, we will continue to expand our sales force with a target of 130 by year end.

We also expect to continue to accelerate sales growth.

On a second note, we remain in serious discussions with several potential international partners for ESTRASORB.

We would prefer to have a deal in place by the end of the year or at least early first quarter.

We obviously want to make certain that we have optimal long-term relationships with our new partner and we also have a financial arrangement that makes best sense for Novavax.

On the manufacturing front, we will begin producing ESTRASORB on our new high-speed filling equipment on November 15th.

As we said, we filed the CBE 30 on October 12, therefore, mid-November production is planned.

In addition, we continue to move ahead on schedule with our new bottle packaging solution, the next measurable milestone for our new bottle will be our FDA filing in mid '05.

As can you imagine from Rahul's presentation, we are ecstatic with the process of our new product development utilizing our drug delivery platform.

We have disclosed to you that we now have 3 non-hormone products that have passed 2 important steps in the development process.

We have successfully put them into the micellar nanoparticle emulsion.

They have passed stability testing and are now ready for animals.

You must remember that these are products with proven safety and efficacy profiles and demonstratable blood levels if animals are strong indicators they will work in man.

We should be ready to disclose our animal results in early first quarter.

This is great progress and we are indeed excited.

In addition, with Dr. Bandak joining Novavax, we should be ready to report more concrete clinical plans for ANDROSORB in the first quarter.

Finally, the advancement of our flu vaccine program could not be more timely.

We have a unique technology, a well-defined program and discussions are underway to gain financial health for program acceleration.

We will keep you informed of our progress.

In closing, each employee at Novavax is focused on making a difference.

We have made significant progress and I am optimistic that the best is yet to come.

We expect ESTRASORB to be the first new product of many and continue to see significant interest in our technologies by major pharmaceutical companies, as well as government agencies.

We continue to believe the financial markets undervalue our Company.

Given our technologies, our product programs and our talented organization.

Finally, I want to acknowledge and thank each and every member of the Novavax team.

Our progress is simply the result of their commitment and their hard work.

And as to the Novavax shareholders, I emphasize again as Rahul and Gale's presentation would indicate, the true value of this Company is in our pipeline.

Operator, we now would be glad to take questions.

Thank you, sir. (Operator Instructions).

Our first question comes from Ken Trbovich with RBC Capital Markets.

Good morning, gentlemen.

Good morning, Ken.

Hi, Ken.

Actually, I wanted to start with Rahul, if he could, I was pleasantly surprised to see a little bit of the detail here on the pipeline projects.

And I was curious if he could explain how one of those first 3 projects ends up being an OTC product.

I'm just kind of curious about the commercial aspects of that kind of a project.

Does it have any ability to revert back to a prescription status using the MNP technology?

Are you speaking about --

NX-301.

Okay, no, that product already is an OTC product, so it's going to stay as an OTC product.

It's going to compete in the OTC space.

In terms of the commercial scale, when you look at an OTC product, what's the threshold that you need to achieve before you consider development?

I think it's in the billion dollar range.

Okay.

So obviously significant opportunity despite being OTC.

In terms of the animal models for these projects, I mean, obviously you guys are intending to test to see blood levels.

Do you have blood levels that correspond that you need to see in the animals that correspond to human data, or is it simply to see that you can get it through the skin and into the blood?

We've got some good correlations, at least for the previous steroidal or hormonal products that we've tried with rabbits as a model animal.

And we continue to believe that rabbits are good animal models for us because they tend to give us the right correlation on a weight-to-weight basis.

Okay.

And finally, I guess for Dr. Smith, in terms of the avian flu project that you've had with the government, obviously this is a pandemic program.

How does it compare to earlier programs that the government has put into place for things like, you know, the biologic threats like smallpox and anthrax, is it something that they expect to fund to have available and to have more manufacturing capabilities?

Or is it really just from the experimental status of figuring out whether the capability even exists to produce it on short notice?

No, I think it's the former, where the FDA has defined a process that we were -- we intend to follow to get this kind of vaccine approved.

It's -- as you perhaps know, you would not run a Phase III clinical trial with an EBOLI or small box or one of these bird flu vaccines or SARS.

So the process is very much shortened to Phase I and Phase II safety studies.

And [inaudible] combined was showing that it's effective in at least 2 different animal models.

So we have one animal model that will obviously repeat that and then the second animal model that's required or recommended, if you can, is a primate.

So once we've completed those steps, the Phase I and II trials, proof of principal and animals we would then seek a license for a pandemic flu.

The government has set aside as a part of bioshield money to stockpile those kinds of vaccines, and I suspect there will be a continued discussions on how we can be prepared for the next pandemic.

Okay.

And one last question, then I'll get off.

I apologize.

Dr. Smith, could you give us some sense as to the clinical program that would be needed in terms of an an annual flu vaccine for humans?

What sorts of trials would be necessary and the relative size and timing that it would take for those types of studies?

Typically for influenza vaccines that are more or less -- biological equivalents is not something the FDA is entirely willing to accept, but at least you know, with great certainty I think, whether a flu vaccine that really is based on the same kind of entity that's been in the vaccines for the last 50 years, just an inactivated version of the virus, you can measure the specific kinds of immune responses that are correlative.

Because of that, the clinical program is easier than it might be for an unknown.

So what typically is done for flu is Phase I and Phase II clinical trials can be linked and the early Phase II efficacy study is often a challenge study in a small number -- several hundreds of individuals.

And then once you've demonstrated that would be perhaps 3 large clinical trials, different geographical locations, also controlled, placebo controlled in young adults.

Perhaps 2,000 to 3,000 in each of those studies.

They could be done over a single flu season or probably more likely over 2 successive flu seasons.

That's a Phase III trials?

Phase III trials, correct.

That would be basis for licensure.

Terrific.

Thank you.

Thanks, Ken.

Our next question comes from Ralph Anderson with Weiser.

How are you?

Hi, Ralph.

How's everything going, good?

Terrific.

A couple questions.

I have 4 questions.

If nobody is going to use the MNP technology to deliver a drug which is already approved, how long will the approval process be to change the MNP technology?

As an example with Xanax which is an approved pill wants to change to a lotion, how long will it take to obtain FDA approval?

The NX-400, my second question would be, the NX-400, is it a 1 year, is it 5 years?

I don't what the time frame is with that.

The scripts to date, you know, I see them every Monday.

I like them.

Are they in line with you -- forget about where we want to be compared to a comparison but, you know, with 750 to 800, are we -- are we in line, are we below, are we above where we should be?

And I guess the fourth question would be the new packaging for the ESTRASORB, regarding the pump, how long before approved and how much will it save the Company?

Those are my 4 questions.

Okay.

So the first question was time to approval for a new product that we put in micellar nanoparticles and remember that this product, whatever it would be is -- has already been through the FDA, so it's approved safety and efficacy are already resolved.

Right, the efficacy is there, that's right, Nelson, right.

Rahul, I'll turn that question to you.

It entirely depends on what molecule it is because depending on what molecule it is, you might require different type of clinical trials.

But as a ballpark -- and also the other thing is that the regulatory strategy could be different depending on the molecule.

But ballpark is if we have the resources we go -- we could get that approved in like -- at least get it in the NDA or AND type of filing in 2 to 3 years.

Okay.

After we've received, you know, Phase I clinical data.

Okay.

Ralph, your second question was NX-400, which actually we're excited about because it serves an as example, large pharmaceutical company that all of us on this call are familiar with, calling Novavax, establishing a meeting and we reviewed technically the feasibility of putting their product or products in our platform technology.

Right.

We have drug in hand and are currently putting it in the formulation at this moment.

And Rahul check me here, but I believe you could expect the same time frame for development that he described in your first question.

Right.

Okay.

But we're ecstatic because this company has multiple product opportunities for us.

We obviously have to prioritize those amongst the rest of our compounds.

We're getting to a choice where we're going to have to make decisions as to, you know, selection in terms of which one ones go into the products, first, second, third, et cetera, but we're ecstatic that companies are coming to us now.

Okay.

And I would hope, Ralph, as we become more visible in commercial market place now that we'll even increase the possibilities for us.

I know that's been an issue of yours and you're going to hear much more from us in the next 12 months than you heard in the last 12 months.

Good to hear.

I understand that.

Okay.

Your third question was regarding where are we with prescriptions for ESTRASORB, are they in line with our expectations.

We have Ford here at the table.

So I'll turn it to Ford Lynch, our Senior VP of Sales and Marketing.

Thanks, Nelson.

Yes, Ralph, they are in line.

We anticipate October will be in the 35 to 40% range over September.

And when you look at the weeklies, Ralph, in a 4-month rolling kind of fashion, we find the weekly trend that way is still very encouraging.

Incidentally, kind of surprisingly, and positively, more and more of the prescriptions are coming now from the oral market.

So that opens up a whole new vista for us, more than we had anticipated.

Okay.

All right.

So there -- so as far as you're all concerned, the scripts are positive -- more positive than negative at this point, the way they're coming in on a weekly basis?

Yes, most definitely, despite the wobble you get week to week.

Okay.

But I would add the caveat to that, Ralph, that I don't know of a CEO alive that is satisfied with any sales level.

We will -- we are thinking every day how do we do better.

Okay.

So don't ever -- don't ever think for a second that we're going to rest on our laurels and be satisfied with where we are.

No, I appreciate that.

But as long as it's ahead of where you think it should be and, yes, I love to see sales higher than they're expected, but as long as it's in line and maybe a little bit higher, that's very welcome news and encouraging news to me.

Ralph, of course, there's no room for complacency ever so we hope it will even pick up.

Just on a further note of that, I did reference it briefly in my opening comments, but you know, the strategic magnificence of the King transition certainly has impacted our tactical implication -- or implementation because when you launch a new product at the time that you're disassembling half of the sales force that was going to promote the product, it certainly disrupted our launch initially.

I think Ford and his team have done a good job of redesigning the territories, bringing in those key people from King that we -- that we thought were necessary, and they've done a good job of finding really exceptionally talented experienced sales reps from other companies to fill our gaps, and we're very, very close to having the sales force fully aligned the way we want it.

Okay.

Your final question was regarding our packaging, and I ask you to obviously think in 2 compartments.

One is our fixed cost which is just simply driven by volume.

We got to drive a lot of volume through the plant to absorb that.

But also an important part of our manufacturing costs are the 2 variables, and of course they're the active and then the packaging.

To put the product in packets is significantly more expensive than to put it in bottles.

Right.

So once we get to the bottle, perhaps late next year, because we do require a prior approval by the FDA, but in the meantime, we want to drive as much efficiency in the operation as we can with the package.

Rahul and his team over in manufacturing have done a great job of moving up from a slower, small-volume packaging filling machine to a very large, high-volume packaging machine, which actually reduces our packaging costs by 50%.

Okay.

And then you'll see another order of magnitude beyond that once we move to the bottle.

Okay.

Okay.

Thank you.

Thank you.

Our next question comes from Jim Malloy with Oppenheimer.

Thanks for taking my call.

Hi, Jim.

I had a couple of quick questions on the NX-400.

I thought that was a very interesting piece of information.

Is there any further news you can give us?

Clearly, it's probably not a lot, but can you talk a little bit about sort of the target market size or the type of drug that it is -- you're using there for solubility?

I can -- I will not tell you the category today, but I will tell you that it's in the billion dollar range, market size is billions of dollars.

Jim, we would be love to be able to tell you all the details, but we have a partner to consider here, and so you know, once the partner is comfortable with the disclosure as well as us, we'll give you the details, but we are -- we have a high level of confidence of the technical capability to put these products in our technology and achieve therapeutic blood levels.

Excellent.

The other question was regarding the licensing candidates.

Talking about your change in strategy where you are going to be licensing products out.

Can you walk through the details of that a little more and when exactly you'll go to licensing and will it always be at that point or will you take some straight through to market yourself?

I think, like I said, we did ESTRASORB, we took ESTRASORB all the way.

I think what the value of that is that we know now that the product is going to be approved by FDA if we have the right stuff and then it's going to be accessed by consumers.

I think Novavax's idea is that we want to apply this technology to a broader portfolio of products as possible and the question is, like you said, what is the right point when you should license?

What we are finding, as I said in my presentation, the risks are up front.

If we can get the product to Phase I clinical trials, that is we can get the form of kinetics that is the blood levels in humans, and find that the blood levels are -- you know, getting therapeutic levels of the drug, then I think at that point you've basically kind of almost -- you're certain that you're going to have a product.

So that's the right place to go and shop around for -- to companies that are in, you know, potentially selling you that space or would be interested in getting in that space, so we believe that once we get the product to Phase I clinical trial, the data there is a good point to go in and talk to those companies.

Hey, Jim, this is Denis O'Donnell.

Just a global comment on NX-400.

This is something that we had always hoped and had been in our global, you know, development scheme for our platform technologies, again, without going into any details.

But this is a product that this company is facing potential generic competition from and would like to extend the proprietary nature of their product.

Obviously, this is something we would like to do with many drugs in multiple therapeutic areas for many companies, and once you start to get the success in 1 or 2 of these, of these processes, then you start getting companies coming to you either as the patent has expired or before the patent is expired in their products so that they can retain that, as I always like to compare them, branded generic or proprietary generic status of their product.

So it's so expensive for companies to develop whether it's an OTC or an RX product, their own individual new chemical entity.

Novavax's platform delivery systems give them an opportunity to extend and extend for the life.

Remember, the micellar nanoparticle patent expires in 2017, so they would have significant long-term patent extensions.

Clearly, this is a strategy you guys had talked about, it's a positive to see it come into fruition.

Absolutely.

The third and final question.

Any thoughts on getting another product to put into the sales person's bag when they go into the OBGYNs in the near term?

I don't -- I guess, Jim, I -- I'm reluctant to define near term.

I can tell you that -- in fact, just yesterday I had some discussions with another company, so we're obviously exploring those opportunities.

We have the capacity for another product for certain.

So we have to pay attention to it.

So it's on our radar screen.

Okay.

Thank you very much.

Our next question comes from Whit Davis with CSFB.

I'm sorry, we missed the name.

His name is Whit Davis.

CSFB.

Congratulations on getting the government interest here in the vaccine program.

That's great.

Thank you.

The -- one question or a couple of questions related to the vaccine.

Do you think the government is more interested in the monovalent or the trivalent vaccine?

I mean, there's a great deal of interest in both, obviously.

I would say it's hard to place a priority on one or the other.

We haven't had a major worldwide epidemic called a pandemic now and we're over due in like 20 some years, that we've had 4 in the last hundred years.

The worse being the 1918, 1919 Spanish flu.

They're meeting this week with the WHO, looking at pandemic flu and how we're going to respond to it.

I think that they're both high priorities for the government.

This year, I mean, experts have for years been saying we've got to get out of A, we've got to get a better way of making flu vaccines, but it is now obvious to everyone that we can no longer depend on one manufacturer and Lancaster County, Pennsylvania, collecting all the eggs from the Amish to make our flu vaccines.

So I think -- I don't know if there's a difference in priority.

They're both very important.

Okay.

And given the priority, what do you think the probability is the government may cut the timeline for the approval process?

So I would take that question, how much faster could we move if we were given greater financial resources.

Okay.

Okay.

Well, it would -- it would potentially, you know, cut a year or 2 off of the normal development cycle for this kind of vaccine.

If we can get the kind of support where we can move at optimum speed, but you know, whether that's going to happen or not is something that we'll have to report next time.

Okay.

Thank you very much.

Thank you, Whit.

Our next question comes from Terry Niebor with Stifel Nicolaus.

Good morning, gentlemen, and thank you very much for this call.

I really appreciate it.

My first question is about HIV testing.

Where is that at at this point and has it gone into animals yet?

Yes, it has.

We've largely finished our small animal testing.

We've produced the VLP version of an HIV AIDS vaccine at Novavax and then send it off to our colleagues at universities to do the testing.

And we are now weeks away from immunizing the first primates.

So you know, that -- that program is on schedule for human trials probably early in '06.

Oh my God.

Congratulations.

Thank you.

My second question, you've got a melanoma vaccine.

On a purely theoretical basis, could the VLPs be used for immunizing for other types of cancer?

That is one strategy that we are pursuing.

That's correct.

Because virus-like particles which are 100 to 200 hundred nanometers, they're -- cells have evolved over the millions of years to recognize these sort of subcellular particles very differently than they do like for example proteins.

So a protein-based vaccine for cancer will -- would be -- could be presented far better as a virus-like particle than it could be perhaps any other way.

So, yes, you know, we're not actively pursuing that now, but it's certainly something we're thinking about.

Okay.

And then on the other side, you know, there's been a lot of press lately on the COX-2 inhibitors, Vioxx and Celebrex.

Would -- theoretically, is there a possibility that if these had been introduced into the body transdermally rather than by pill that it could have reduced the number of heart attacks or eliminated them?

That's a great question, but you know what, unfortunately the mechanism of how these COX-2 inhibitors actually cause cardiovascular vent [ph] is not known, so it's not possible for us to speculate at this time whether giving these drugs transdermally would solve or would make them more efficacious or remove their side effects.

So only when we find out what the mechanism is will we be able to make a better judgment on that one.

Then one last question.

We've managed to get through a tremendous press onslaught with article after article being done on this flu vaccine without Novavax ever being mentioned in any major press publication.

How was that possible?

This is the first announcement today, public announcement of our vaccine.

I see.

I had heard it a couple of weeks ago on a conference call out in San Francisco and then the follow -- follow up to the previous conference call.

Are you going to begin -- you had mentioned you know time to market and optimum speed involving a number of factors.

Certainly calls to the White House from Congressman and Senators, as well as the public would help.

Are you going to do more to give visability to your programs?

We have a firm engaged to help with us that very issue in Washington.

Super.

How soon do they engage?

They are engaged.

Wonderful.

Thank you very, very much and congratulations.

Thank you.

Our next question comes from Jim Malloy with Oppenheimer.

One quick follow up.

Nelson, in the press release you mentioned discussions for a marketing partner for ESTRASORB.

Was that the European marketing partner or was that U.S.?

Well, we -- you know, we certainly -- we definitely need a European marketing partner.

If fact, I'd like to even expand the thought.

We'll call it an outside of the United States marketing partner.

It has possibilities certainly to drive volume to the plant, maybe at lower prices, but like for example in South America.

But we are in discussions for outside of the United States markets.

Jim, almost every partner or potential partner we talk to are obviously also interested in the U.S., so we wouldn't take it off the table, but our primary interest obviously is to make certain we exploit the drug around the world.

The opportunities around the world.

Okay.

Thank you very much.

Yeah.

(Operator Instructions).

Our next question comes from Ken Trbovich from RBC Capital Markets.

Just wanted to follow up and find out, when you're doing these programs for other companies using their proprietary molecules, are you actually signing agreements that essentially retain the rights to the data for your own purposes, since it would appear you might actually be incurring some costs?

Or are they actually paying for these costs as a formulation and then gaining rights to the data themselves?

Well, first of all, we own the data.

Second of all, Ken, I think as you can imagine, once you've demonstrated with 1 or 2 or 3 partners, that this is a very successful alternative, the price will go up.

So let's think of low -- lower barriers to -- lower hurtles to entry for those opportunities early on and as we fill our capacity here, certainly that hurdle will go up in terms of cost to the potential partner.

But as Rahul mentioned in his presentation, the time and cost early on to emulsify, make certain it's stable and achieve a rabbit blood level are very low.

I mean, they are very low, like in the range of $200,000 to $250,000 per compound.

And then go to rabbits and I mean, you're into Phase I very quickly.

So our costs are very low up front.

I don't think it would be appropriate for me to disclose the terms of the deals, so maybe in time you'll get a better flavor for that.

But we're just ecstatic that people believe in our technology, are bringing their drugs to us.

We have several drugs in hand now from other companies and our Chief Scientific Officer, Craig Wright on the West Coast is at this time putting those drugs in emulsions.

Okay.

And in terms of balancing the need for confidentiality from the client perspective, versus balancing the need for disclosure for your shareholders about materiality or events that may be material, at what point during that development timeline on slide 9 do you think it crosses over to the point at which you have to disclose some element of the value even if you're not disclosing who the partner is and what the molecule might be?

That's a great question, Ken.

I mean, first of all, I should have counsel better tell me what that time is, but I -- I think we're safe without disclosing at least through the animal blood level, as we enter into the clinic, you know, then that would require some serious discussion and we obviously are going to disclose as we are counseled from our legal counsel.

Okay.

Thank you.

Our next question comes from Robert DeLinco with the Vertex Group.

Hi.

I'm just a little confused and maybe can you help me out here.

Who's paying for this lotion emulsion testing that begins for these future MNP products?

Well, ultimately obviously the partner will pay for that.

Ultimately.

So in other words, the up-front costs for you -- you are burdening the up-front costs?

Well you have to also consider variable versus fixed.

I mean, our fixed costs for our small proof of principal lab are essentially all the costs so it's just a function of what is the capacity of that -- of that group right now.

I don't think he's at capacity at the moment, but he is close to it, but remember, we have just moved from a model of ESTRASORB only to a multiple shots on goal here.

So our incremental costs to emulsify as Rahul described in product NX-400 are minimal.

I mean, minimal.

So if over the next 6 or 12 months a half a dozen drug companies showed up to try and emulsify their products to see if there was a potential of developing actual products for their -- this would not really be a major impact to your R&D costs?

Well, only if we had to add people, which would obviously add our capacity -- to our capacity.

And as that would happen, I mean, having been in this business for 30 years now, we've done a lot of deals and I mean, a typical biotech model is a big Pharma covers the cost of product development and pays significant milestones as you achieve, in the case of our technology, an animal blood level entering Phase I, entering Phase II, entering Phase III, regulatory submission, regulatory approval, come to market.

And then other milestones as you take it to other countries.

So that's a fairly typical biotech big Pharma profile of a deal and I think that, you know, you can think in those terms.

It's obviously a function of, you know, how big are the dollars at each step, and then what's the royalty rate in the end.

But you can be rest assured that, you know, we'll have a sharp enough pencil that it's a good business decision or Novavax.

I'm sure of that, Nelson.

The other question I had was trying to put this in perspective.

If you could get the attention of the regulatory authorities for this -- for this flu program and it was able to go through these launches of, you know -- not launches but phases, trials, what is a realistic point if it was to go forward where you think you might actually be able to be in production, full production for launch?

Well, as I said, you would typically -- well, let me an your question.

You're saying if we get the full support that would be needed, then I would say 2 flu seasons with Phase III trials and as quickly as we can get there, you don't have to do a Phase I or Phase II during a season, but to show that a vaccine -- our vaccine is safe, efficacious in the community, it would have to be done in field trials and over flu seasons.

And so you are somewhat at the mercy of how effective or how prevalent that flu is on a particular year, but it's reasonably reliable and if it went our way, it would take 2 full seasons I would think.

I suppose 1 is theoretically possible.

So that's -- give you an idea of the number of years.

The flu season, of course, being done during the winter of each year.

So you're probably at least 3 years away from being able to bring this product to market?

I mean, is it -- it could be done quicker but that's a reasonable estimate, right.

Thank you very much.

Our next question comes from with Whit Davis with Credit Suisse First Boston.

I had a follow-up question about the worldwide marketing partner.

When do you hope to have someone signed up?

I think I mentioned in any comments, Whit, I mean, I'd love to have somebody signed up tomorrow.

Big Pharma doesn't move as fast as small Pharma, so we're somewhat at the mercy of the pace of these potential partners we're talking to.

But I -- you know, I would say we're pleased with the pace and we're certainly pleased with the diligence that they've done.

I can tell you significant diligence has been done.

Diligence in terms of evaluating our manufacturing process, and our plant.

Diligence in terms of our patent protection.

We're behind that.

Diligence in terms of our scope of the market opportunity, so we are well along the way and I would love to think that we could have a deal signed by the end of the year, but again, we're not in full control, so you know, I do think it's -- I do think it's pretty likely though that we'd have somebody signed up by the first quarter, somewhere in the first quarter.

Most likely is the first quarter you think?

I think so, probably.

I mean, there's -- there's so much activity underway to close the year, obviously it -- it makes the discussions more complex when you take it beyond the U.S. market.

I mean, you have to -- you have to look at the opportunities in each of the markets to determine a licensing arrangement or a co-marketing arrangement.

So it -- it realistically will probably be the first quarter.

And can you tell us if you would consider being -- if you consider yourselves being at a final negotiations stage with one partner or where you stand there?

I actually want to dodge that question because I think it would compromise our discussions with the multiple parties that we're under, because they are at different stages and so I would rather not compromise our competitiveness.

Understood.

Thanks.

Thank you.

Gentlemen, I show we are no further questions at this time.

Please continue with any concluding comments.

I just want to thank my executive staff that I have with me on this call today, continue to thank the Novavax employees for their hard work and effort, and I certainly want to thank the shareholders for your support through what's been an amazing year for Novavax, very challenging, but amazing with the accomplishments that this team has tackled and delivered for our shareholders and I can tell you that our shareholder, we view as our number one customer, and we will stay hard at work to make sure that you are rewarded.

Thank you for joining us in the call today.

Thank you, sir.

Ladies and gentlemen, this concludes the Novavax, Inc. third quarter earnings release conference call.

If you would like to listen to a replay of today's conference, please dial 1-800-405-2236 or 303-590-3000 followed by an access code of 11013357.

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