Novavax Inc (NVAX) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Novavax Q1 earnings conference call. At this time all participants are in listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this call is being recorded. I would now like to turn the call over to Buck Phillips, Chief Financial Officer. You may begin.

Thank you, and good afternoon, everyone. This is Buck Phillips, Chief Financial Officer of Novavax. And I would like to thank everyone for joining today's call to discuss our first-quarter 2014 financial results. Today's earnings release is currently available on our website at Novavax.com and an audio archive of this conference call will be available on our website later this evening. Joining me on today's conference call is Novavax's President and CEO, Stan Erck; and Novavax's Senior Vice President of Research and Development, Dr. Greg Glenn, as well as some other members of our executive team.

Before we begin our prepared remarks, I need to remind you that we will be making forward-looking statements during this teleconference that could include financial, clinical, or commercial projections; statements relating to the future financial or business performance; conditions or strategies or other financial and business-related matters including expectations regarding revenue, operating expense, cash usage, and clinical developments as well as anticipated milestones. All of these are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks, and uncertainties which may change over time. I will now turn the call over to Stan Erck, President and CEO.

Thanks, Buck, and good afternoon, everyone. We are now four months into 2014 and I'm very pleased to tell you that we have already achieved a number of our key corporate objectives for this year. We have also delivered on a number of important achievements that go beyond our earlier guidance, which I will discuss with you this afternoon. Arguably our most important announcement of the year has been the top-line data from the Phase 2 dose confirmation clinical trial of our respiratory syncytial virus or RSV vaccine candidate in 720 women of childbearing age.

Given the importance of that data I would like to ask Greg Glenn to start our conference call today with an overview of this important clinical trial and key top-line data, as well as a brief overview of the next steps in our RSV maternal immunization development plan. When Greg finishes, I will speak to the other corporate highlights and achievements during the quarter as well as key anticipated events through the end of the year before handing the call to Buck Phillips, who will go over the financials. We will then open the line to take any questions you may have. And Greg, let me turn the call over to you to discuss our recent RSV trial.

Thanks, Stan. And good afternoon. On April 28 we announced the top-line data from our dose confirmatory Phase 2 clinical trial in 720 women of childbearing age. The study was a randomized blinded placebo-controlled trial designed to evaluate the immunogenicity and safety of multiple formulations of our RSV-F protein nanoparticle vaccine that was adjuvant with aluminum phosphate. The study enrolled 720 women between the ages of 18 and 35, who received either one or two IM injection featuring two different dose levels of antigen with a range of doses of our aluminum adjuvant.

The data discussed today relates to the 91-day period following the first immunization. Highlights include the RSV-F vaccine candidate was well tolerated with no vaccine-related serious adverse events. The safety profile is very consistent with our prior studies.

There were significant increases in the RSV anti-F antibody levels, observed across all doses and all formulations -- again, very consistent with our previous studies. The highest new responses were observed with a single dose of vaccine combined with the lowest of the dose of aluminum adjuvants. And clear increases were observed in both RSV-A and RSV-B neutralizing antibodies, again across all doses and formulations. The increases in neutralizing antibodies were strong, the strongest in women entering the study with the lowest baseline levels, again similar to our previous observations.

What stands out is that the single 120-microgram antigen dose generated peak palivizumab-like antibodies of approximately 400 microgram per mL, the highest level seen in any study to date. The vaccine-induced palivizumab-like antibodies demonstrated again very strong concordance with the anti-RSV-F IgG antibody response. When we looked at the kinetic analysis of the antibody responses, they showed rapid increases in the antibody levels in all vaccine formulations. The single 120-microgram dose, antigen dose, again generated peak antibodies to both RSV-F -- as measured by RSV-F and the palivizumab-like antibodies at 14 days after immunization. And these high levels were sustained through the 91-day observation period.

So, to say the least, we are highly encouraged by this data. The safety and immunogenicity gain was observed to be very consistent with previous experience. We delivered improved immunogenicity in a one-dose regimen, which could improve patient convenience, vaccine uptake, and compliance. And this data, we hope, will support the first maternal immunization study plan for the fourth quarter of 2014. We have requested a Type C meeting with the FDA this summer to discuss our applications for proceeding with the study in pregnant women. And we do expect in the near future to present the entire data set in some detail at an appropriate scientific forum in the future.

Before moving on I want to highlight and acknowledge that this study was conducted in collaboration with PATH, a nonprofit international health organization that, quote, is driving transformative innovation to save lives. PATH provides both valuable technical advisory and financial support for this maternal immunization vaccine development program which we both believe is transformative and could save lives of many young infants in the future.

With respect to the coming years, we have indicated before we are proposing that the next clinical trial be conducted in pregnant women immunized with the RSV-F protein vaccine in the third trimester. This will allow us to confirm the safety of the vaccine in both women and the infant as well as to confirm that the antibodies generated by the vaccine are transmitted transplacentally. The data generated from this coming trial should provide a basis for moving the program into efficacy evaluation.

I should add that the data generated in this latest clinical trial as well as all the preceding trials are informative and encouraging as we move towards expanding the testing of our vaccine to other populations including the pediatric and combination vaccines.

So with that, I will turn the call back over to Stan.

Thanks, Greg. As I'm sure you can all tell from Greg's presentation that we are very excited about the data and the future of the RSV program. So let me expand a bit. So we have now completed four clinical trials with our RSV vaccine -- one in young adults, one in the elderly and two in women of childbearing age. All these trials have consistently demonstrated a clean safety profile combined with a very robust immune response. For RSV over the next 12 months, as Greg mentioned, we plan to initiate our first trial in pregnant women to demonstrate transfer of antibodies to newborns. We also expect to initiate our first trial in the pediatric population in an effort to develop a vaccine to protect kids from six months to six years of age. And finally, we expect to initiate our first trial for our combination respiratory vaccine candidate against both RSV and seasonal influenza, what we refer to as the pentavalent respiratory vaccine.

Switching over to influenza, as discussed in our last call, we have initiated a Phase 1/2 clinical trial of our H7N9 avian influenza VLP vaccine candidate and our Matrix-M adjuvant technology. This trial enrolled 610 healthy subjects to evaluate safety and immunogenicity responses to the vaccine with adjuvant. This trial is evaluating three different dose levels of the antigen and two dose levels of the Matrix-M adjuvant. We continue to expect the top-line safety and immunogenicity data will be reported in the fourth quarter of this year. We believe this trial will lead to a dose confirmation trial in healthy and elderly adults, followed by a Phase 3 immunogenicity trial.

Moving on to our Middle East respiratory syndrome coronavirus, or MERS program, last week we announced published data in the journal, Vaccine. These data demonstrated that our MERS vaccine candidate blocked infection in laboratory studies. As many of you probably know, this emerging viral threat has been gaining momentum in the Middle East. Just this week the first case of MERS was reported here in the US, proving the potential of these viruses to move quickly around the globe. The current unofficial overall totals are 507 total cases and 142 deaths. We will obviously continue to monitor the MERS situation and keep you posted as to our development plans, but I want to underscore that MERS is yet another example of how Novavax technology can be rapidly and effectively utilized to address emerging virus scenarios.

So far in 2014 we have also demonstrated continuing commitment to our alliances. Our influenza contract with HHS BARDA along with its access to $97 million in funding was extended beyond the original termination date of February 2014. We also announced a continuation of our RSV maternal immunization partnership with PATH that Greg mentioned earlier. And both of these alliances bring valuable development resources, insight, experience and nondilutive sources of capital to fund our lead programs.

And finally, we continue to strengthen our management team to meet the challenges and deliver on the promises of our vaccine technologies. On the last call I mentioned that addition of John Trizzino as senior Vice President, Commercial operations, who will be responsible for the planning and execution of our product launches for our flu and RSV vaccines. We recently announced the hiring of Dr. Cindy Oliver to the position of Senior Vice President, Process Development Operations. Dr. Oliver will be responsible for all process development activities with a specific focus on the Company's RSV-F protein nanoparticle, seasonal influenza, and pandemic influenza vaccine candidates. Previously Cindy served as Vice President of Process Biochemistry and Formulation Sciences at Medimmune and before that she had similar responsibilities at Merck.

Yesterday we announced the appointment of Sven Andreasson to the position of senior Vice President, Corporate Development. Sven brings a long history of experience in the vaccine and pharmaceutical industry to Novavax. And Sven will help us evaluate opportunities outside the company that complement our current platform.

With that, I will turn the call over to Buck to review our first quarter 2014 financial results.

Thanks, Stan. Before I continue I must note that the financials I will be discussing here reflect the consolidated results inclusive of our July 13 acquisition of Isconova AB, now Novavax AB. For the first quarter of 2014 we reported a net loss of $13.8 million or $0.07 per share. This compares to a net loss of $10 million or, again, $0.07 per share for the first quarter in 2013. Novavax had revenue in the first quarter of 2014 of $7.5 million as compared to $3.8 million for the same period in 2013. The increase was primarily due to a higher level of activity associated with the Company's US Phase 1/2 clinical trial of our H7N9 vaccine candidate with our adjuvant Matrix-M as well as preliminary manufacturing work for our planned Phase 2 seasonal influenza trial and revenues under our PATH contract in support of the Company's Phase 2 clinical trial in women of childbearing age.

The cost of government contracts increased to $3.0 million in the fourth quarter of 2014 from $1.7 million in the same period in 2013. This increase again is directly related to the increase in revenues under our contract with HHS BARDA for our Phase 1/2 H7N9 clinical trial and the preliminary manufacturing work for our planned Phase 2 seasonal influenza clinical trial.

Research and development expenses increased to $14.5 million in the first quarter of 2013 compared to $9.3 million for the same period in 2013. This results primarily from higher employee-related costs tied to continued growth in the support of the RSV and influenza vaccine programs as well as the inclusion of Novavax AB R&D-related expenses. And finally, general and administrative expenses increased to $4.3 million in the first quarter of 2014 compared to $2.9 million in the same period of 2013, resulting primarily from the inclusion of Novavax AB expenses, higher professional fees, and employee-related costs.

As of March 31, 2014, the Company had $12.8 million (sic - see press release, "$112.8 million") in cash, cash equivalents, and investments compared to $133.1 million as of December 31, 2013. The increase in cash usage from prior-year is primarily due to the ongoing RSV phase 2 clinical trial that Greg discussed as well as higher employee-related costs and the timing of customer and vendor payments. We expect our quarterly cash usage to be considerably lower over the foreseeable future.

With that, I will close my comments and turn the call back over to Stan.

Thanks, Buck. Thanks, Greg. So let's open it up to the operator for Q&A.

(Operator Instructions) Bill Tanner of FBR Capital Markets.

Thanks for taking the questions. I've got a few of them. Maybe the first one for Greg, just in terms of the pediatric RSV vaccine studies. What kind of learnings from what has been done with clinical trials thus far that could be applied to the pediatric studies? And what I mean is just in terms of the adjuvant that needs to be used and the dose and maybe just your thoughts on the extrapolatability of the safety and potentially efficacy (technical difficulty) in your patient population.

Yes, good questions. So to date we have now experience in over 1000 subjects using our RSV-F antigen with or without alum in different doses. And those divide a tremendous menu for us to select what might be appropriate for the pediatric population.

As you know, we are considering the six-month to six-year period for immunization and our target product profile at this point is an annual seasonal vaccine. Based on what we've seen -- and this, of course, is quite different from maternal immunization in that this would be an active immunization where the subjects receiving the vaccine would have ongoing antibodies being made versus a maternal immunization.

So, that being said, we would go into the pediatric trial with a fairly narrow set of questions that might relate to whether or not we would like to use aluminum phosphate in one or two doses. And I think we also will restrict ourselves to an older age group, where we know that they have some previous experience with the virus, called seropositive population. So those would be the sort of, I think, going forward, questions we would ask. So these responses were seen in these last -- actually, all four trials but in particular in the healthy adults, where we have -- a lot of comparative data have been very consistent in terms of the safety and the immunogenicity. And that's -- and, of course, induction of what we would consider functional immunity. So, we are able to go into a pediatric trial with a lot of confidence in our vaccine and looking for the kind of responses we think are going to be protective as we move towards efficacy.

And then to what extent do you think the FDA is going to have some concern about safety, given the track record for an active vaccine in the pediatric setting? Is that something that, because it's a subunit particle vaccine should be different than from I guess it was an attenuated virus vaccine then?

Yes. Just to review that experience, through the 1960s, there was a whole virus that was formalin-inactivated and put on aluminum hydroxide. In that trial they had observed disease exacerbation in the vaccines that was greater, significantly greater than the placebo. So that experience was observed in children 18 months and under. After induction of the vaccine they had no neutralizing antibodies and no functional fusion inhibition antibodies. It's quite clear that to reproduce that scenario many groups have relied on the cotton wrap model, where you can immunize with that vaccine. And in fact, we have access to the original lot of vaccine, create a data set that reflects what was seen in children that had this outcome and then show that your vaccine is highly differentiated in terms of functional antibodies.

And that, by the way -- that data is on our website in the [portal] presentation under Dr. Smith's presentation in RSV. So you can actually look at the primary data on that. So we have to provide, I think, confidence that our vaccine will perform quite differently, which we are very certain of, and then take important steps to ameliorate that as a safety consideration. And so, we will still propose to go into the older pediatric population that, by definition, has had some experience with the RSV virus and they are therefore called seropositive subjects. And I think the general consensus is that population is not a risk population for that phenomenon.

So that's where we'll start and we will develop a plan going forward based on the data we see. But, of course, the safety would be a preliminary consideration. We think that that's a very low-risk setting and our key opinion leaders agree with us that that would be the setting where one would begin to evaluate the pediatric vaccines.

And then maybe, Stan -- you mentioned -- don't know if it's for you or for Greg again -- just on the H7N9, just thinking about the path forward, I think you will have the data readout. It sounded like you might do some dose finding and then go into the Phase 3, just trying to understand the scope of the additional work that needs to be done, because obviously it seems like it's going to be a smaller trial than one would think if there's not really an efficacy endpoint, per se.

Yes. I think the endpoint, though, is the immunogenicity. As you recall from the first trial, we had very good immunogenicity. And I would point out, if you look around the landscape, our data stands out as being very good still, to this date. So we expect to reproduce that with Matrix-M. That would lead to dose confirmation and a Phase 3 trial that then may be done and licensed based on the immunogenicity of the vaccine itself. And we would probably use this guidance, the CBER criteria that either relate to seroconversion and seroprotection. But at this point we haven't laid out specifically what that would be, but we certainly expect, of course, to have this vaccine licensed just on the immunogenicity of the vaccine.

And maybe just one more, if I could just squeeze it in. Just in terms of -- I guess Henry Waxman is requesting folks on the Energy and Commerce Committee maybe hold a hearing on MERS. Any thoughts there as to what the outcome could be? Is there anything good? Do you think there's really going to be a takeaway from it? Or is it maybe just the legislators looking like they are busy?

I don't think I can actually comment on that. I don't know the answer to that question. We are getting -- there's a lot of interest. We are starting to get inbounds from a variety of different sources all the way to the Middle East. And so I'm not clear what the direction is going to be right now. There has been -- all of this surgeon activity has been just in the last few weeks. So it's a clear problem. We have a potential solution and we were early enough on this to actually have some published data on it.

Okay, all right. Thanks a lot.

Ed Tenthoff of Piper Jaffray.

I apologize if these questions have asked. But congratulations on the RSV data. I think it was very informative in terms of dose to take forward and trial design. Can you tell us a little bit more about the plans for the maternal immunization, the pediatric, and the potential influenza combo studies for the RSV vaccine?

So thanks for the question, Ted. So the maternal immunization -- as we mentioned, we expect to have a meeting with the FDA, provide them with a data package on the product, the clinical data, et cetera, and we provided them our draft protocol of what we expect to do in the fall. And assuming that we agree on the path forward, we expect to do a trial in pregnant women. It will be a relatively small trial, will be -- we proposed 50 subjects -- 25 placebo, 25 active, where we will immunize in the third trimester based on the dose we have determined on this study. And we will follow the children through an RSV season. So that would be the safety evaluation, safety in pregnancy for active immunization and safety of the children after having received the antibodies passively.

I think things that would be really important highlights and I would say really landmark data for vaccinology will be to observe the induction of the antibodies that we measure and mothers and their induction (technical difficulty) their transmission transplacentally to infants. And as you know, that's a physiologic mechanism. With other vaccines, we see very robust transmission. Certainly antibodies at the level of the mother, so we would expect to see that the palivizumab-like antibodies will appear in the infant. And I think that will be a very important and, I would say, landmark finding in vaccinology, to be able to create this type of antibody activity in infants.

If it is on the order of the level of antibodies we saw in this trial, which I would just point out that our vaccine has performed very consistently, that we would be transferring antibodies on the order of 400 micrograms per mL to infants, I think that would be a really very interesting and important finding in that trial.

And then we expect to do a limited in kinetics to watch the decay of the antibodies in infants. So we do some limited sampling of the sera and hopefully (technical difficulty) and therefore determine to what degree we might expect the protection to last and how long through infancy. So that will be a very important trial establishing safety. I would say just as an aside there was a previous F protein used in pregnant women. So from a risk standpoint in this population we won't be doing something new. But this will be a vaccine where it's a recombinant protein (technical difficulty) palivizumab-like antibodies.

Assuming that that trial goes forward and we observe what we expect to observe, the following year then we the go into a larger trial where we would be exploring the efficacy of the vaccine in infants and third-trimester immunizations and looking for the reduction of medically attended RSV disease as proven by PCR in a larger population.

So that's sort of, I think, the horizon in which we are discussing in terms of maternal immunization with the RSV-F vaccine. So with respect to the combination vaccines, we expect to take the current quadrivalent vaccine that we are manufacturing and, bedside, mix that with the RSV-F vaccine. And that really would be a safety and immunogenicity trial in healthy adults and elderly. And we expect that to be a relatively small trial. But since we know a lot about the immune response we think that the RSV-F immune response we measure in the neutralizing antibodies in the palivizumab as well as the HAI targets and the flu -- all these are meaningful measures of immunogenicity that can be associated with protection.

We think the immunogenicity trial will be very informative. And again, we expect to see the sort of antibody levels we've seen in our previous trials of RSV-F and our flu vaccine. So this exercise in women of childbearing age is very informative. It really helps guide our thinking on the combination vaccine and, as I mentioned earlier, on what we do in pediatrics. So it's a tremendous data set, both safety and immunogenicity, that gives us guidance on formulation and dosing choices.

Excellent. That's really helpful. Thank you very much for that detailed response.

Greg Wade of Wedbush.

Greg, can you just remind us what vaccinations women get in their third trimester? And do you anticipate that the women that are planned to be enrolled in this study will get all of those, as well as the RSV vaccine, or will you be doing some mixture of the other vaccines they may choose to get and then as well as giving the RSV? And then what are your thoughts on the pediatric vaccine? Is the Company primarily thinking they will drive to a product which is a combo flu/RSV with no adjuvant, or do you think that an adjuvanted annual RSV vaccine is acceptable for little kids?

So on the maternal plans we will adhere to standard of care. So women will receive the vaccines that they should get in the third trimester. So just to cover, I think there are three vaccines that are most prominent and given to pregnant women. Of course, you know globally -- and we do have a global interest in our vaccines -- tetanus vaccine is given to all women of childbearing age, all pregnant women, to prevent neonatal tetanus. And as you will recall, that has been a fantastic public health success with a 92% reduction of what is a very bad disease, neonatal tetanus, globally.

So in the US the influenza vaccine was given as a seasonal vaccine regardless of the gestational age, so that would include third trimester women. But of course, that's given in the fall, in advance of the influenza season. And then all women receive the pertussis vaccine, whooping cough vaccine. And generally speaking that is recommended in the third trimester. And that, again, that would be standard of care. So this is, again, from a risk standpoint we have had a major advance in the biology of RSV with our findings. But then in terms of execution and practice, it's nice not to be taking giant new strides in terms of immunization practice. So maternal immunization is the practice. It's accepted. It's standard of care. And I think it's very important that those precedents have been established. The pertussis vaccine, as you know, is recommended by the ACIP, and universal immunization of flu has been around for some time. And actually that has been interesting. In the context of flu it has been shown to have very good effects on the mother and the outcomes of pregnancy and the outcomes in infant influenza. So we are following a pretty well tread pathway there, albeit with a novel vaccine.

And I forgot -- you asked me about pediatrics?

Yes. Is the endgame in the six months to six years to get a combo flu/RSV so that the children can avoid exposure to the adjuvant, which both hurts and --

Yes. So we haven't made that decision yet. That's one of the things we would be testing, the aluminum -- the alum adjuvant -- we use in aluminum phosphate, commonly used in many pediatric vaccines -- one of the outcomes that we had in this trial -- whenever you use something like aluminum phosphate, you need to show you are using the minimum dose required to get the desired response. And so we were able, I think, to fulfill that obligation. And these are very low doses. But we really haven't made that final formulation decision, nor have we at this point made a commitment to take combination vaccine into pediatrics. We do see ourselves as wanting to be an RSV vaccine franchise. And we think our vaccine is very promising. We have data that seem to be breakthrough and we are anxious to provide this modality to all the populations at risk for RSV.

And I'm just going to have one follow-up. Stan, what would a potential MERS-CoV medical countermeasure look like?

So from our point of view it could be a vaccine that could be used -- actually, the medical countermeasure could be to vaccinate animals would be one way. The other would be a human vaccine. And those are the two that are currently on our table right now -- same vaccine. Is that the answer to your question?

Yes. Do you believe that a mass vaccination in people would be potentially acceptable based upon the limited number of folks that have been infected?

Yes. It obviously depends on which way, which direction the disease goes. It might be in a geographic area.

Thank you.

Kevin DeGeeter of Ladenburg Thalmann.

Good afternoon, thanks for taking my questions. Most of them had been answered. But I just wanted a little bit about business development. You did announce the appointment of a new head of corporate development this week. And maybe you can talk about bit about priorities, particularly in light of a lot of the M&A activity that's going on in big pharma and how that's reshaped the potential partnering landscape for a program like RSV and potentially the flu, for that matter. So I guess the two questions here are just, how is that external change in the landscape factor into your thinking on business development? And what are the priorities for the new head of corporate development that you announced this week?

Thanks, good question. So let me go back to what I consider business development as opposed to corporate development that is commonly referred to as -- business development is getting outside partners to help support your program, the typical large pharma biotech company. And we remain committed to the idea that bringing in a large pharma partner at this stage is not to our benefit or our investors' benefit, for a couple reasons. One is we think we've done a really good job of developing the RSV vaccine candidate into multiple indications -- elderly, kids, and they are at least heading toward pediatrics and maternal immunization. And we don't think this would have been done as quickly under the auspices of the usual coordination you have to do with a big pharma company. And we think that's true for the foreseeable future. So we lead in this product and we lead the industry in this product and we want to maintain that lead through to licensure. And so we are not interested in partnering it.

And then, of course, the economics -- we want to maintain the economics for Novavax, 100% of the economics for Novavax for the time being. We think it's a really important vaccine, perhaps the biggest vaccine, new vaccine to be introduced in the foreseeable future. And we are confident that the data that we've shown gives us a lot of confidence that the vaccine will be protected. So we think we have de-risked the program to a degree. And we've got to get into Phase 3's and beyond. So that's the rationale between our not partnering.

The other side of the question, the corporate development issue, is we have now got a company that has grown to where we are getting into Phase 2 and Phase 3 trials. We have got to start thinking commercially about how to introduce these products, what other companies or products might be compatible with our future development. So we've brought someone on to explore all of the opportunities external to the company that might be compatible. And that's in part because we have a greater ability to think of bringing -- doing M&A type activities, whether for licensing in or products or like we did with Isconova last year, which is to bring important technologies into our company. So that's the role of the corporate development is to explore outside opportunities that could fit with what we are doing.

Terrific. That's it for me. Thanks so much.

Vernon Bernardino of MLV & Co.

You had mentioned a few of the details regarding your Type C meeting with FDA this summer. And one of the things I think you mentioned was providing a draft protocol. So just wondering if you could share some of those details in the draft protocol.

Well, I think the level of detail I can provide to you is that we expect to do a 5011 trial, randomized, placebo-controlled, with our vaccine given to half and placebo to the other half, given to the subjects in the third trimester. We will have a cord blood draw and a day-of-birth draw from the mother. So we would have a match -- infant-mother sera pair. As I mentioned, we will sample -- we expect to sample infants on a limited basis to describe a half-life, a mean kinetics of the antibody response to the vaccine in the infants over approximately four-to-six-month period.

And then the key elements of the safety will be to, of course, evaluate the vaccine's safety, as we have been in women of childbearing -- in the pregnant women, and then to evaluate the safety of the presence of antibodies in infants through an RSV season. So they will be actively monitored for exposure to RSV and any respiratory illness would be PCR-ed for presence of virus.

I think that's kind of in a nutshell what I can describe and what we have said publicly.

And I think you had mentioned you are also going to measure transmission of some amount to infants. What is that exact measure? I think (multiple speakers) --

That's a good question. So put we do is we take -- at the day of birth you have a sera sample taken from the mother. And the cord blood is associated with the infant size of the circulation and it comes out with the placenta. So commonly people collect cord blood for banking for stem cells, et cetera. We will collect a sample of that blood. And so we can take the mother's sera and the cord blood, which is the baby's blood, and evaluate them for the presence of anti-S IgG the palivizumab-like antibodies and the neutralizing antibodies and see how closely there is a match between the mother's level, which should be elevated due to the vaccine, and then what's in the baby's blood, which would be due to transfer, active transport to the placenta from the mother's (technical difficulty) to the baby's sera.

And of course, we will have a control group. So you should have mothers who have little or no palivizumab antibodies, for example, and so the babies would not have them. And so we are able to control and determine the level of transmission. And this is a phenomenon that's very well-known and many antibodies that have been described, showing that they are transferred from the mother to the baby by this mechanism. And it's a physiologic mechanism for protection of infants -- they basically are given the full complement of the mother's infectious disease experience has manifested itself as antibodies to protect them from for the first several months of life. So until the baby develops its own active immunity through exposure to pathogens.

So a lot is known about this phenomenon of placenta transfer. And we would expect that the antibody levels that we induce in the vaccinated mothers will show up at least as high in the mothers as they have in the infants. So there should be a relative match of those antibody titers. And as I mentioned, we see very high levels of palivizumab-like antibodies in the mother, and it would be very encouraging and, I think, de-risking for the program to see those [certain] levels of antibodies showing up in the infants.

Thanks. I appreciate that detail. It sounds like you got a lot of things figured out already for this study, once you get it started. Regarding the pentavalent vaccine, just wondering if you could provide something about a timeline here, what is the status and what work needs to be done. You had mentioned that it would be starting in late 2014 or early 2015.

That's about right. That's about the right time frame. So it will be simply a safety and immunogenicity study. So it won't be a long, long study in terms of being able to provide some top-line data on the immunogenicity. We will measure. There's going to be five components. There are four. As you recall, we are going to have a quadrivalent flu vaccine which has two B strains and two A strains. We will measure the immune response to each of those strains and then we will measure the antibody responses to our flu vaccine as we have in the past, looking at anti-F IgG palivizumab levels to neutralize the antibodies.

And I think the critical question there will be to see how those immune responses interact, in other words, is there some diminution in the responses in the presence of the combined vaccine? Or is there some enhancement, as we have seen in the animal studies, where when we add flu and RSV-F together the RSV-F antibodies response is augmented by the presence of flu vaccine.

So regarding the timing there, is it because you also want to start late this year to be in time with the regular flu season?

Well, we have -- the beauty of having two hemispheres and two seasons, and it's possible that we would go to the southern hemisphere to not complicate the interpretation of the trial by being out of the flu season. So we have that option, as we did for H7N9. We did do that trial in the southern hemisphere, in Australia.

So this is just the timing of -- as Greg says, we've got options. So we don't have to wait past the flu season; we can pick. But this is available product. We are now scaling up production of a quadrivalent flu vaccine because we are planning on starting what we refer to as the 206 trial, which we hope to be our final dose confirmation quadrivalent flu vaccine trial. So we will have material available from that as well as our RSV production. So we will have the ability to go into that clinical trial in the fall, let's say late fall.

Great, thanks for taking my questions.

Bill Tanner of FBR Capital Markets.

Greg, I just had a question on the pentavalent, what you actually need to show in a registration study. I'm assuming that you would not need to show that there's a difference in subjects that are dual infected versus not, depending on the vaccine. Explain to me how that would work, then.

Well, we haven't really laid this out. There's a couple possibilities, that we will show efficacy in the separate vaccines themselves, which has been a traditional way for combining vaccines. So when do you get a -- when your child gets a combination vaccine, those individual components have been shown to work first. They establish immune correlates and then you combine them. So that's a possible route for a combination vaccine, where we show the efficacy of the separate components; that would be the seasonal flu. As you know, BARDA is funding that. We plan on being in seasonal flu Phase 3 trial within this coming year. And then where would that data come from RSV -- I think that is yet to be determined. But if we have the efficacy and that was associated with a certain level of immunity, that would makes the task of getting the licensed combination vaccine simpler, in our view. And it might be possible to do that just based on immunogenicity.

And so you would need to show that what you are going to be doing is that there is an attenuated immune response when you combine the two?

Right. That's exactly right. So that has always been the key task of the vaccines that have been combined to make sure they don't interact in a negative way when you coadminister them.

Okay, thank you very much.

I'm showing no further questions. At this time, I would like to turn the call back over to Stan Erck for any closing remarks.

Okay. Once again, thanks for everybody participating. We look forward to reporting to you again in the quarter. And as you can tell from the call, we've got a lot of activities going on throughout the rest of the year. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.