Novavax Inc (NVAX) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Novavax second quarter financial results conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer sessions, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference may be recorded.

I would now like to turn the conference over to our host for today's call, Ms. Andrea Flynn. You may begin.

Good afternoon. This is Andrea Flynn, Senior Manager of Investor Relations at Novavax.

I would like to thank everyone for joining today's call to discuss our second quarter 2015 financial results, as well as the results from the Phase 2 trial of our RSV data Vaccine in older adults.

Press releases about the trial results and earnings are 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.

In addition, there is a slide deck that details RSV Phase 2 results available. The slide deck can be accessed by visiting our website and either clicking on the webcast button or by visiting the Events section under the Investor portions of our website. We will refer to that slide deck during our prepared remarks.

Joining me on today's call is Novavax's President and CEO, Stan Erck; together with our CFO Buck Phillips, Senior Vice President of Research and Development, Dr. Greg Glenn, and Vice President and Chief Medical Officer, Dr. Louis Fries.

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 future financial or business performance, conditions or strategies and other financial and business-related matters, including expectations regarding revenue, operating expenses, cash usage and clinical developments and anticipated milestones 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 change over time.

I will now turn the call over to Stan.

Thank you, Andrea. Good afternoon, everyone. We are very pleased with you today to discuss not only our second quarter financial results but also the most significant event in our Company's history, the positive topline results from the Phase 2 trial of our RSV data Vaccine in older adults that we announced an hour ago.

This is the first RSV vaccine to demonstrate efficacy in any population. The product demonstrates statistically significant efficacy in the prevention of the RSV disease, and RSV lower respiratory tract infection in older adults.

Importantly, the vaccine was also safe and well tolerated. Based on these results, and efforts across the entire organization, we are now positioning ourselves to begin Phase 3 trials with this indication.

In addition to the existing clinical results, we are also able to determine the attack rate of RSV in this population. This attack rate validated both the significant burden of the disease and also the commercial opportunity.

Beyond the RSV program we have also announced important clinical data, [among] clinical programs. These included positive results from our Phase 2 quadrivalent seasonal influenza trial and Phase 1 results from our Ebola GP vaccine trial. We expect this data readout momentum to continue with data from our Phase 2 maternal immunization clinical trial still expected this quarter.

Our balance sheet remains strong providing us with the capital necessary to aggressively develop our pipeline programs and advance these programs to the market. For this call, we are going to have Buck Phillips start with an overview of second quarter financial results and then have Dr. Greg Glenn provide a detail review of the RSV Phase 2 results and clinical data from our recently announced [quadrivalent seasonal influenza] trials.

And finally I will provide a commercial overview on the RSV market in older adults together with the summary of our programs and then open the line for questions.

Over to you Buck.

Thank you, Stan, and good afternoon everyone. Today we announced the financial results for the second quarter of 2015. Summary of financial statements can be found in today's earnings press release.

For the second quarter of 2015, we recorded a net loss of $20.6 million or $0.08 per share. This compares to a net loss of $17.9 million or $0.08 per share in the prior year period. The increase in net loss in the second quarter is primarily the result of increased R&D expenses related to clinical trials of our RSV data vaccine candidate, our Ebola GP vaccine candidate, and in higher employee related costs relative to the same period last year.

Revenues for the quarter were $14 million compared to $8.3 million for the same period in 2014. This 69% increase in revenue in the second quarter of 2015, is the result of a $7.7 million, onetime cost to recovery under our BARDA contract delineating to 2011 and 2012 indirect billing rates.

This increase in revenue was partially offset by a decrease in revenue resulting from a lower level of development activities under the HHS BARDA contract, and our path agreement in the second quarter of 2015, as compared to the same period in 2014.

For the first quarter of 2015, cost of government contracts revenue decreased 47% to $2.7 million compared to $5.1 million in the same period of 2014. Consistent with my prior statement on revenue variance, the decrease in cost of government contracts revenue was associated with a lower level of development activities under the HHS BARDA contract in the second quarter of 2015 as compared to the same period in 2014.

R&D expenses increased 65% to $25 million in the quarter compared to $15.2 million in the same period in 2014. The increase in R&D expenses was primarily due to increased activities related to our ongoing RSV vaccine clinical trials, our Ebola vaccine clinical trial, and higher employee-related expenses tied to the continued growth of the Company.

G&A expenses increased 22% to $7.1 million in the quarter compared to $5.8 million in the same period in 2014. This increase is primarily due to an increase in employee-related expenses tied with continued growth of the business at Novavax.

Increases in employee related expenses, both for G&A and as I had mentioned earlier for R&D, are primarily driven by growth in headcount. As of June 30 2015, the Company has $314.9 million in cash, cash equivalents and investments on the balance sheet.

This concludes my review of the financial statements. I'll now turn the call over to Greg.

Thanks Buck, and good afternoon everyone. I'm pleased to present to you today our Phase 2 RSV vaccine results in older adults. Building on Stan's prior comments, I believe that this dataset represents a significant achievement for the Company, and a potential breakthrough product for patients.

I'll start with an update on our Ebola program, move to seasonal influenza vaccine and then end with detailed discussion of our Phase 2 RSV data.

We recently announced positive data from the Phase 1 clinical trial of our Ebola virus glycoprotein recombinant nanoparticle vaccine candidate that was adjuvant with Matrix-M. The data was presented as part of World Health Organization Fifth Teleconference on Ebola vaccine clinical trials.

Overall, the data demonstrated that our Ebola GP vaccine was highly immunogenic, well tolerated and in conjunction with our proprietary Matrix-M adjuvant resulted in significant antigen dose sparing.

The trial was randomized observer-blinded dose escalation trial to evaluate safety and immunogenicity of the vaccine, both with without Matrix-M in 230 healthy adults between 18 and 49 years of age.

Participants received either one or two intramuscular injections ranging from 6.5 to 50 micrograms of antigen on trial day 0 and 21. And we assess the immunogenicity of multiple time points including days 28 and 35.

The antigen vaccine was highly immunogenic at all those levels. Importantly the addition of two dose regimen have induced Ebola anti-GP [geometric mean] antibody responses between 45,000 and 70,000 units representing a 500 to 754 fold rise over baseline in Day 35.

The adjuvant of single dose regimen induced a geometric mean between 1700 and 3400 representing 21 to 27 total rise over baseline in Day 35.

Combined with the data from our three positive [count] studies in nonhuman primates, we have confidence that our Ebola GP vaccine could be protective in humans. In addition, the vaccine was highly immunogenic at low doses, which should allow for antigen dose bearing.

Now moving on to the seasonal vaccine, we recently reported positive results from the Phase 2 clinical trial of our recombinant quadrivalent seasonal influenza vaccine. As a reminder this trial was being conducted under the Company's contract with our partner BARDA.

This Phase 2 trial was a randomized, observer-blinded dose ranging trial, designed to evaluate the safety and immunogenicity of our quadrivalent seasonal vaccine in 400 healthy adults.

The trial demonstrated the quadrivalent seasonal vaccine was well tolerated, with no vaccine related serious adverse events. The trial also met its immunogenicity targets and demonstrated potential to making the center for biologics evaluation and research [receiver] criteria for accelerating approval.

Titers of the antibodies that inhabit hemagglutinin by the influenza virus called hemagglutinin inhibition titers, HAI, remains the best [except quotes] protection provided by influenza vaccines.

We are pleased to see that our vaccine candidate elicited increase in HAI titers for all four viral strains tested. In particular for the two viral strains for which we sought improvement in the new response, we showed a robust HAI titer and approximately 50% greater titer to notes in our prior Phase 2 trial.

We also measured neuraminidase inhibiting antibody responses against seasonal influenza viruses for the first time and we were able to detect significant antibody responses to all four strains.

We are conducting a complete review of these data with our prior competitors to determine the next steps in the development of this process. Our expectations for the next test in our collaboration will be the initiation of a Phase 2 clinical trial of the H7N9 vaccine candidate in the adult population in the first quarter of 2016.

Now, for the highlight of the call, I will move to the Phase 2 RSV data. For this portion of my prepared remarks, I will refer to presentation that Andrea mentioned previously. Again, that can be accessed by visiting our website and either clicking on the webcast button or by visiting the events section under the Investors portion of the website.

So, starting on Phase 3, I'd like to highlight that this Phase 2 data builds on a long history of external investigations by many prominent scientists, as well as our own internal development here at Novavax.

We have completed numerous preclinical studies that demonstrated that the vaccine had the potential to be safe immunogenic and highly efficacious. We have been able to build on a work strategy passive antibodies. Most notably palivizumab, or preclinical models were predicted through results, randomized clinical trials in humans by demonstrating test antibodies were protected and by determining protective levels of these antibodies.

We followed up on these predicted insights and have pioneered the use of palivizumab competing antibodies or PCA as a measure of functional vaccine introduced to immune responses in addition to microneutralization.

Before initiating this Phase 2 trial, we completed of addition of six clinical trials that continue to demonstrate safety and immunogenicity of over 2000 participants were exposed to the active drug substance.

Slide 4, provides an overview of the trial. So in October, 2014, we initiated a Phase 2 trial at a randomized observer-blinded placebo controlled trial of 1600 clinically stable older adults, 60 years of age, and has been conducted a 10 U.S. based sites, subjects were either given 135 microgram dose of RSV vaccine with or without adjuvant, or they were given placebo.

Goals of the trial were to evaluate the incidents of symptomatic RSV disease in this population and to describe the effect the vaccine on these illnesses. Our the slides able to keep up with the presentation.

So, everyone hang on for just a minute, we're getting the slides back up.

Is the audio still on?

Yes.

Why not continue and we'll make into the key slides, or make sure we have. So, we're going to continue, Slide 5 and discuss the primary and secondary objectives of the trial. The primary objectives were to evaluate the incidents, symptomatic respiratory illnesses due to RSV, in community-living older adults, who have been treated with placebo, to examine the amplitude and duration of the anti-F IgG antibody responses in patients receiving the vaccine and to evaluate the safety and tolerability of the vaccine.

Secondary objectives, including evaluating the amplitude and duration of the Palivizumab competing antibody responses and microneutralization antibodies to both RSV-A and RSV-B viruses.

In Slide 6, we have additional exploratory at Ad-Hoc evaluations, this included estimating the efficacy of our RSV vaccines and all symptomatic RSV illnesses, and all symptomatic RSV lower tract infections.

We're also in this trial looking to define the clinical syndrome associated with RSV illness, to look for relationship between the new measures and protection and describe the spectrum of other pathogens associated with symptomatic illness.

Finally and importantly, we evaluate the amplitude of vaccine with regard to symptomatic RSV lower tract infections and looked at the vaccine efficacy in the context of symptoms that would be associated with difficulty breathing.

So Slide 7, we look at the demographics briefly. Overall, the trial arms are well balanced. The slide also provides the number of patients including for safety identity and for protocol analysis. So in safety population, in the vaccine, we have 798, in the placebo 801, and the per-protocol 759, 771 in the placebo.

These are mostly -- the balance between male is 42% and mean age is around 70. We did recruit a significant number of patients over 75 as around 17% and you can see the ratio break down at the bottom.

So turning to Slide 8, this shows some high level epidemiology trial results here. This is the attack rate, the attack rate we saw, observed here was 4.9% for symptomatic RSV disease. The symptoms we measured included pharyngitis, nasal congestion, cough, wheezing, shortness of breath and increased sputum production. Of these subjects, 95% had lower respiratory tract infection which included cough, wheezing, shortness of breath or increased sputum production.

On Slide 9, we show the key efficacy results. Overall, our vaccine demonstrated statistically significantly level of efficacy and prevention of all symptomatic RSV disease at 44% and prevented symptomatic RSV lower respiratory tract infections at a level of 46%.

This slide provides relative risk and efficacy estimates on a per protocol basis for both all symptomatic RSV and RSV with lower respiratory tract infection. And from this slide you can see that the relative risk analysis clearly favors the vaccine.

So let's move to Slide 10, we also looked at Ad Hoc analysis of lower respiratory tract infection associated with symptoms and signs that would be associated with difficulty breathing.

There were significant decrease rates of symptomatic RSV illness associated with at least three to four symptoms at least one of which indicates difficulty breathing, which would include shortness of breath, wheezing or tachypnea. You can see the vaccine efficacy here was 64% for three or more symptoms, a significant effect indicated by the confidence intervals.

Consistent with the greater vaccine effect for more severe disease when compared against the Cluster 4 symptoms the vaccine efficacy continue to increase to 75% compared to 64% for three symptoms.

If you go to the next slide and look at the capital [myer] curves on Slide 11, they show the early and continued divergence of the vaccine effect from placebo, and a robust durability of protection that lasts throughout the RSV season, and with a significant difference here in this analysis as well, the key value 0.39.

Now moving to Slide 12, we showed the anti-F IgG antibody response rapidly peaked by day 14 and then remained elevated through day 56. Importantly we demonstrated 4.8 fold increase in titer as well as 93% zero response rate.

On Slide 13, turning to the palivizumab-competing antibody response, we saw again a rapid response that remained elevated through day 56 with the 96% zero response rate and a 5.24 fold rise which all closely follow the anti-F IgG response.

On Slide 14, we showe the microneutralizing antibodies to RCA and V there were significant shifts in both measure although the baseline antibody titers as measured by this assay were quite high. For the technical folks, the amount of new antibody is measured from a zero baseline, will be about a lot 27 decrease.

To put these results in context, we have Slide 15, to show the efficacy of other respiratory licensed respiratory vaccines in older adults. Based on these results, the government agencies recommend flu and pneumococcal vaccination for this population and about 60% to 70% of that population currently received annual flu vaccine.

As you can see, annual flu vaccine effectiveness can range from 0% to 43% in older adults and the efficacy for the pneumococcal, conjugated pneumococcal vaccine in the same population was 46% as demonstrated in the recent large randomized clinical trial.

Based on our Phase 2 results our vaccine has the potential to demonstrate similar or better protection compared to these vaccines. So to summarize, we are quite pleased with the data. Slide 16 shows a summary of the conclusions.

Overall, we see a 4.9% rate of symptomatic RSV in these adults and 95% of these illnesses are associated with lower respiratory tract infection, that tracks well with Dr. Ann Falsey's journal paper showing a high rate symptomatic RSV infections when detected.

We also saw a significant reduction in symptomatic RSV lower respiratory tract infection using our vaccine. And when we look at more severe illnesses, a 64% reduction in more severe illnesses.

There is also durable protection for the entire RSV season which is important as we expect this to be an annual seasonal vaccine. And just again to point out, this is the first study to demonstrate an effective RSV immunization.

So with that, I'm going to turn this back over to Stan, and let him take it from here.

Okay. Thanks Greg. Hang on just one more second while we get slides caught up. Okay. Can we get to the next slide? Okay. Here we are. So, thanks guys. So this is great news for RSV vaccination in general.

And I want to emphasis the significance of the results in the older adults. This is the first vaccine to demonstrate efficacy against RSV disease in any population and particularly exciting given that we are vaccinating the most difficult to treat population.

So on Slide 17, that you can see with the benefit of our Phase 2 data in hand, I want to take a quick look at the RSV burden of disease and in turn the market potential for our RSV vaccine.

Globally, RSV is a serious disease and affects the very young and older adults for the three major geographic markets, where we are currently focusing our attention. There are more than 37 million infections per year that result in a cost burden of greater than $83 billion.

Novavax is looking at these three regions, initially as a primary commercial market for the target populations. Most at risk or serious complications from this disease. That population includes older adults, 60 years of age, new born zero to six months, and toddlers six months to five years of age.

As you can see on this slide, each of these major markets have a significant disease and economic burden, and collectively demand a solution for RSV disease. So the next slide specifically addresses the burden of disease in older adults.

These estimates were obtained through a surgical literature, previous estimates from Falsey and all in the New England Journal of Medicine show that there are 2.4 million infections per year in older adults greater than 65 years of age.

This represents 5.5% of the target population. What was nice to see in our study was that we saw a similar rate of infection of 4.9% attack rate. As a result, there are almost 900,000 medical interventions every year 0.5 million physician visits, 152,000 emergency room visits and over 200,000 hospital admissions.

All of this creating 4.9 million loss productivity days, and 14,000 days per year from complications to the RSV disease.

On Slide 19, the economic -- this slide shows you the economic impact in the U.S. due to RSV disease in older adults and that exceeds $23 billion. The economic implications range from the cost of a physician office visit to a hospitalization and worst case death. An effective RSV vaccine that can prevent disease and reduce severity will have a positive effect on economic outcomes.

If we look at the narrowest definition of economic burden, the direct cost impact from hospitalization and other medical interventions it exceeds $3.4 billion.

So on Slide 20, to highlight the significance of RSV disease from another perspective let's take a look at other respiratory diseases in older adults that we know well, influenza and Pneumococcal Pneumonia.

As you can see from the graphic, RSV is roughly equivalent to influenza and Pneumococcal Pneumonia in terms of burden of disease, and these figures are for the U.S. but it is a ubiquitous disease globally. And then going on to Slide 21 -- so with that this is repeating what Greg's slide showed, so I won't reread it, we will leave it up there.

So what's next, so we will continue to aggressively move this program forward into Phase 3. As I mentioned to many of you over the past year or more, our intention is to initiate Phase 3 testing by the end of this year but that requires all the stars to line up. And the stars to which I refer include good day from our Phase 2 clinical trials, that star is now lined up.

Having product available from our Phase 3 production, we began Phase 3 production in June and hope to have release products soon. Getting the sufficient number of clinical trial sites on Board and ready to start-up again, we've been working on that and expect to be ready.

And then finally we are preparing and end of Phase 2 package for review with the FDA of a process that's ongoing. We will then schedule that meeting which is intended to address all of our data including safety, efficacy and manufacturing data with the hope that we get an agreement to go forward. So everything continues to move forward toward our Phase 3 trial.

So to conclude, we have delivered positive data from three clinical programs and expect to report on our [return] immunization clinical trial later this quarter. This execution is a direct result of the strength of our clinical development manufactured in process development efforts, our regulatory and quality teams and the experience of our management. It also highlights the power of our technology platform.

We've come a long way. We couldn't have done this without the significant support of our investors, our outside medical and scientific collaborators, and our dedicated employees. And I'm sure you have a number of questions, so I will wrap up there and open it up to Q&A. Operator?

(Operator Instructions). Our first question comes from Cory Kasimov of JPMorgan. Your line is open.

Hi, good afternoon, and congrats on the results. Sorry, if there is feedback from my line. This is [Morton] sitting in for Cory. I had a question on any of your plans for the Phase 3. Could you elaborate on potentially how much larger the study will be than the Phase 2 and if you're going to enroll more sites than just 10, and were you planning on making it a global study to take advantage of more I guess RSV season? Thanks.

So this is Stan, so good question, Phase 3 we've been - in the back of my minds we've been considering the Phase 3 would look approximately like 8,000, perhaps 8,000 to 10,000 people. We have based in -- if you recall this study was 1600 people.

I think the numbers that came in both with the attack rate and the efficacy, effectiveness of the vaccine, both lead us to the similar conclusion but we haven't nailed down the precise number. We'll do so over the next few weeks and I think we'll readdress this and provide more detail when we have our analyst meeting at the end of September. The number of sites I think is roughly 50 sites and these are sites that we've already been setting up.

Okay. And do you have any indication of whether you're making a global study versus just U.S.?

What we are looking for Cory -- what we are looking for is to have the pivotal Phase 3 data generated from this trial in the U.S. this year, and as we think about expanding our license share into the EMEA, we can do a European trial study next year some time.

Okay, great. Thank you.

And our next question comes from Joel Beatty of Citi. Your line is open

Hi, good afternoon. Congratulations on the results today, as well as the results announced earlier this quarter. Another question on Phase 3 trial design for RSV. Would you expect to use the same primary endpoint as was used in this trial and then if so, could you explain the need for a much larger trial 8,000 to 10,000 patients given that this trial is statistically significant?

Yes. Hi, thanks for the questions, Greg Glenn here. So, at this point, what we believe we're going to look for is reduction in the symptomatic RSV with symptoms that relate to difficulty breathing. So that would be a little bit of switch as to what we're trying to achieve in this trial was to describe the attack rate and try to define the syndrome that we would put into our primary endpoint.

So, and I think as Stan mentioned, what we're going to do is, I think share more detail on our plans in September. With respect to the trial size and I could Dr. Fries can maybe elaborate little bit more but the difference between this type of trial and the Phase 3 trial is now we are obligated to rule out the lower bound of the confidence interval in the trial.

So that drives the math that Stan related to, of 8,000 to 10,000, even though we might to expect to reproduce the data, that's good now. Instead of being point estimate like we have in this trial, we will need to rule out that lower bound of interval. I don't know if you want to elaborate on that a little?

Yes, great. I think that's correct. Typically because vaccine trials are so large, the regulators at CBER will typically allow you to have a single pivotal trial that demonstrates your pivotal efficacy.

In exchange for that, instead of allowing you to have a statistically significant response by ruling out an efficacy of zero, they ask you to rule out an efficacy of some higher or lower bound, so to say 30% or 40% is the lower bound. And as that lower bound rises, it takes a substantially larger sample size to narrow your confidence interval and exclude that non-zero number. So that accounts for the larger sample size in the trial.

Sure. Is that 30% to 40% lower bound you mentioned something that you would expect to have to hit for the Phase 3 trial?

Yes. I would expect that we would negotiate what that value would be going in. And that would allow us to finalize our sample size calculations as you've heard Stan gave you a range and that's what we have right now, a range because we haven't negotiated that final number for the lower bound with CBER.

Sure. Great, thanks for taking the questions.

And our next question comes from Ted Tenthoff, Piper Jaffray. Your line is open.

Great. Thank you very much and congratulations on some really impressive data here. I think my question has had to do with a bit on timing of the maternal study. I think, Stan, you had mentioned that we might be getting data this quarter, does that mean by the end of September, or I was expecting it more in the fourth quarter?

No. That's actually this quarter.

Okay. So, in September, excellent, that's very helpful. And then, with respect to enrollment of study of 8,000 to 10,000, I just want to make sure I understood what you said, you would basically do that in the U.S. and data would be available next year, is that the correct way to think about it?

Yes. So, I would look at next year, this time next year we should have the data for the Pivotal Phase 3, give it an extra we have more people so those values add probably one extra month or so but this time next year, we'll have that data.

Awesome, all right. Well congratulations, keep up the great work.

Thank you.

And our next question comes from Bill Tanner of Guggenheim. Your line is open.

Thanks for taking the question. Greg, just on the, I'm assuming that in the pivotal trial the inclusion criteria would be the same as those used for this Phase 2?

Yes, that's right. That's correct, that's what we're doing. I think the only change that we might anticipate is pre-specifying the percentage of subjects over 75, but more or less will represent what you see today in terms of the patient profile.

Okay. And so then, as we think about the outcome measure being different than what you show in the Phase 3, could you just address what any obvious risks are, I mean things other than something just being stochastic, or do you look at this is even though you're changing -- the primary endpoint to feel good about extrapolating from what you've seen in the Phase 2?

Yes, I think, just to be clear, being our primary endpoint here then to look for the vaccine effectiveness Ad-Hoc objective and I think it's quite clear, everywhere we look there is a very consistent picture for reduction of symptomatic disease.

I think reduction of the more severe illness is common of theme of vaccines typically the more severe the endpoint, the better the vaccine efficacy and I think we're looking to target a vaccine efficacy with 60% rate.

So, we are very good at execution, I would say there is a few lessons learned that might allow us to capture more subject than we did and maybe increase attack rates. There is various operational considerations that we would take into the Phase 3 trial, certainly every effort de-risking.

And maybe while we're on the topic of risk, I would like to point out that the efficacy here in this trial is very, very promising for maternal, because this population is such a difficult population to demonstrate efficacy, and I think it's fair to say that this really also greatly de-risk the maternal trial where we happen to more in tact immune system much more robust immune responses and should expect a good result in that setting as well.

Well, I was going to ask that what would be the potential rates you will see, you kind of answered that question, but is it relates to de-risking that is that, do you mean de-risking it in terms of getting protective levels of the antibodies to cross the placenta and then also translating into some belief that there is going to be a reduction potentially in the RSV infection rate and the neonates?

Yes. So, really the latter. Our expectation is we will see antibody transfer from the immunized mothers to the infants, we hope that it will be quite robust. That antibody response looks -- those antibodies we mentioned we think are functional and effective based on the preclinical models and now I think we add to that in a very difficult population to show efficacy.

So older adults respond less robustly to vaccines and then there are effective mechanisms for clearing viruses that are not nearly as robust as younger adults. So, my point would be, the results here bodes very well for efficacy in the subsequent trial not this upcoming trial, obviously we are looking forward to the Phase 3 trial internal where we could expect this de-risks that program because we now demonstrated that the RSV vaccine has applications in a very difficult population. I don't know, Loui if you want to add anything to that.

I think it's important to have one of the thing that's really encouraging for us, is that there is a great deal of discussion about what kind of metrics with regard to the immune response are important in RSV disease, and that's still an open discussion.

There has been a long -- there has been a long appreciation that neutralizing antibodies are meaningful, but it's clear that from population to population you can move the needle by different amounts in terms with neutralizing antibody redoubts and then while you have other read-outs we've developed, others have developed some RSV antibodies, there has been up till now no real solid information as to what are those antibodies actually meant clinically.

I think one of the most encouraging things to me is that we have seen relatively good responses in both our anti-F and our palivizumab competing antibodies. Both of which are generated to even a greater extent in young women.

And so we would expect those classes of antibodies induced by our vaccine to be transmitted across the placenta and we would expect them to be protective in infants. So this in a way is validating the major of the immune response that this vaccine produces as being potentially protective.

Great and then I had one question for you, Stan, you mentioned the stars aligning and it looks like three out of the four -- one is been done and the other two out of the three are up to Novavax and the fourth one is up to the FDA.

So curious how good you feel about the ability to getting all those things done and then in the event that you're unable to start would you contemplate going to the southern hemisphere for the Phase 3?

Those are the right questions. We've not -- so we've done this trial. Remember we've done this trial we also went into pregnant women with a lot of discussion with the FDA CBER and actually in particular with the maternal ones I would consider a lot of good advice from CBER.

And so they know this vaccine well and so our expectation is that while the bar is higher when you go to the end of Phase 2 and go into Phase 3, we expect to be able to meet the requirements of that bar and be able to get over that.

So our expectation is that we'll get through, and the question is timliness and we're on a tight timetable and if for some reason that we don't make that then we would, the alternative that we'll always have before us is to go down south as you suggest and start the trial down there then maybe finish up north at the end of next year.

We'll see, but our -- we're doing everything humanly possible to get started before the season in the northern hemisphere.

Okay. Thanks so much and congrats on the data.

Thanks.

And our next question comes from Heather Behanna of Wedbush. Your line is open.

Hi guys, congrats on the data. Thanks for taking the questions. We've had some technical problems with the slides, I just want to know if you guys could give us a little bit of color on the difference between the ITT population and the per protocol population, and if you saw significant difference from the ITT population and what's the P value was for that?

Good question. So we -- let's see, the size of the ITT is 798 in the vaccine and 801 in placebo. And then in the per protocol population is 759 in the vaccine and 771 placebo. When we looked at -- I presented the per protocol analysis there. When we looked at the ITT analysis, it was similar.

The ITT efficacy results and levels of significance were very, very similar to the per protocol, the difference was small. The difference between the two, between the ITT population and the per protocol population, there was only a decrement in the protocol population of about 3% relative to the ITT, which is actually very good retention.

The people who fell out of the per protocol population tended to be individuals who didn't have complete serologic follow-up, didn't have all their blood draws done. There was really a small difference in the number of end point events. And the efficacy estimates and P values were closely similar between two.

Great, thanks that's helpful. And then just a question on the dose, do you feel confident with these data that 135 micrograms unadjuvanted is the way to go or do you think there's room to push the dose higher in the pivotal study to increase your chance of success?

Yes, this is Greg. I think we're happy, this is a good result. We had good immune responses, if you look at the PCA, if we accept some level of protection at 30 microgram per ml, that level is well above the protective level of 100 microgram, 106 microgram per ml.

So I think we're happy, we like the results. I think when we start looking at the more severe illness that will be the place where we'll expect to see this good effect. So we don't anticipate in changing the formulation.

Obviously, the manufacturing et cetera, that all has progressed and so we expect to have a very good unadjuvanted product ready for the Phase 3 trial.

Perfect and just one last one, and I'll hop back in the queue. I was just curious how you think about the variability of an attack rate from season-to-season when you think about powering the Phase 3?

That's a very good question. I think unlike flu, RSV has a relatively consistent attack rate, we've always said sort of predictable epidemic. I think when you look across other studies, there tend to be some waxing and waning of the attack rate, but it's not -- it's nothing like flu. And we are looking at these -- I mentioned earlier, operationally I think we actually might have missed maybe 0.5% in just some of the techniques of surveillance and we can address that.

So it is one of the risks we have. If you're going to season you have a very bad season, but that's not really very common with RSV. So we're comfortable going forward in this trial with these assumptions.

Great, thank you.

And our next question comes from Kevin DeGeeter of Ladenburg. Your line is open.

Hey, good afternoon, guys. I want to add my genuine congratulations, it's great to see you get this kind of clinical impact. Specifically I guess my questions pertain to the, how to interpret this data in the context of potential development of pentavalent vaccine in combination with influenza.

Specifically is there anything you've learned with regard to your top line analysis that might help inform development of pentavalent vaccine? And then just related question, does this data cause you to want to accelerate perhaps investment in the timeline for that program?

Hi Kevin, this is Greg. I think this is -- it's a very good question. This is important to us, establishing that this contrast is vaccine nano particle -- recombinant nano particle works as a landmark I think.

So where do we go from there, we are very committed to getting this to licensure. At the same time we are always thinking about lifecycle management and having the combination vaccine is very interesting to us.

So we will begin to now pay attention to how to do that in a more robust way based on the fact we have data. We also -- as you might imagine, so our assets we bring to combination vaccine include the seasonal flu vaccine, as well as [matrixam] or adjuvant.

And so as part of our lifecycle management of our assets, we'll begin to evaluate whether both of those could play a role in a combination seasonal vaccine.

That's helpful. Then maybe just one unrelated question, question actually maybe slightly unfair at this point. But when you look at this Phase 2 profile, how do you sort of begin to think about pricing?

I guess I had my own thoughts on this, but and other sort of products that you would suggest have profiles that are similar i.e. or potentially being first in class and similar types of rates of protection?

Kevin, it's Stan. And by the way thank you for being an early supporter of this program. But, so you're right, we don't have pricing strategy that would be announced at this point. As you can imagine we look at pricing in the context of -- you look at it in terms of the economic burden. I covered some of that and you can see that it's large.

You're right, we'll be first in class, that gives us some flexibility on pricing. We also look at comparables and you can look at things like Prevnar, and some other vaccines that are given to the elderly.

And then we've also gone to payers and asked them what the target profile such as we have, what would that be and we've gone one step further, we've added to our Board of Directors, Gail Boudreaux, is probably one of the most knowledgeable people in the United States on reimbursement and this area, so we'll use her input into helping us figure out a pricing plan.

I realize that that didn't help you very much in terms of giving you a price, but that's where we look at.

Okay. No fair enough. Congratulations guys.

Thanks, Kevin.

And our next question is from David Lebowitz of Janney Capital. Your line is open.

Thank you for taking my question. Obviously it's positive data, congrats on that. Looking forward to maternal, would you be able to quantify some form of what we should expect to see out of that study and the various endpoints there?

Yes. So, there, obviously the next dataset we're going to have coming up soon, we'll look at maternal antibody transfer, and confirming that we expect in the context of maternal immunization to do two things, to prevent RSV bronchiolitis in infants and that would be as measured by PCR positives and pulse oximetry associated with lower respiratory tract symptoms.

So that would be, I think we're going to focus our primary endpoint and then collect data on more sever disease, hospitalization, medical medically-attended illness. So that's the direction that the maternal program we will go for prevention of RSV disease in infant.

So, just again to reiterate an objective measure in that they have to be PCR positive, we'll look for pulse oximetry that would be abnormal showing that the infants hypoxic and they have some lower respiratory tract signs or symptoms.

So, I would point out and think it's important, we are learning more about the disease burden in the mothers and I think that we're convinced that that's significant enough. So we will also follow the vaccine effect in mothers.

We know that women who get RSV and are pregnant, end up in ICU, there's a very nice case report of three patients, we know that pneumonia is one of the major causes of mortality in pregnant women.

And we've seen in our trials and we've been able to look back at the M202 and M201 trials, using Western Blot and there Western Blot will allow us to decide, to differentiate between those who had recent RSV infections and we were surprised that we did confirm that about 25% of the women in our trial had had a recent RSV infection and the vaccine was able to cut that in half.

And again, that's a fairly high bar to prevent infection. So, I think we have a very encouraging signal there that the vaccine effect could be seeing also in mothers and we expect to collect that data.

So it would be nice package to have at the end of the day which I think is what are asking that we would show prevention of RSV bronchiolitis in infants up to three months and then we would look sequentially at four, five, and six months. So we'd love to see prevention of RSV bronchiolitis in the infant population less than six months. And also show an effect in their mothers.

Excellent. Thank you very much for taking my question. And once again congrats.

Thank you.

And our next question comes from George Zavoico of JonesTrading. Your line is open.

Hi, good afternoon, and thanks for taking my question. Congratulations Stan, Loui, and Greg on a great quarter.

I think you've covered RSV pretty well, so I'll ask a quick question about the quadrivalent flu. Two questions about it actually.

You made a point that you had a robust NAI effect immune response to NAI. But, that's not part of the criteria for approval, but it's potential differentiator for your vaccine going forward. In the next stage of the phase II trial, how do you plan to perhaps leverage that finding and further differentiate your vaccine from competitors?

Well, I think you're right. The (inaudible) responses are not part currently of the criteria for licensure of flu vaccines. However, as you're probably aware, there is a constant and slowly increasing drum beat in the literature surrounding influenza vaccines.

And a protection against influenza that anti neuraminidase antibodies do contribute to protection. They contribute both individually and in a sense synergistically with hemagglutinin antibodies and there are bunch of challenges to examining antibodies. There's been the ability to do it for some time for influenza A viruses.

And so far as I know, we're the only people around who are doing it with any regularity for influenza B viruses because we're one of the few groups that can produce the appropriate reagents to do it.

So one of the easiest differentiators is simply the ability to demonstrate that we can do it. I think when we come to demonstrating efficacy of the influenza products then we will have the opportunity to actually look at the amplitude of neuraminidase inhibition responses in a prospective manner and demonstrate that they are related in for example just a progression model to protection against influenza.

And that's a statement no one will be able to make. No one else will be able make, at least for influenza B. So I think are very cognizant of the fact that we can generate the anti neuraminidase responses that are conveniently more cross reactive against multiple strains than are hemagglutinin responses.

And last but not least, may also be a real virtue to our pandemic candidate, as you recall our anti neuraminidase process to that were like 20 fold over baseline.

Not surprising because these lines were real low. But still they were there and would be a protective response that could potentially spread across multiple strains of a threat organism and broaden the protection from that.

So, I think we will continue to work on improving our ability to assay and demonstrate anti neuraminidase antibody focused on the ability to do it for the B viruses and then as we evolve efficacy we'll actively seek to relate our -- show that there is contribution of that new class of antibody to protection.

Okay. Great. And in that regard in measuring the HIA and the [NIA] effect though you had to alter some of the assay procedures to help differentiate between [that base and your base]. Was that a key part of the being able to keep the zero protection, zero conversion criteria do you think and I would imagine that the FDA would be onboard with that in terms of their approval project?

Actually that whole experiment was done in collaboration with the FDA. That is not -- that maneuver actually did not specifically contribute to the improvements in immunogenicity that we saw, but one of the things that's been going on and has been a challenge in the influenza field over the last two, three, four years has been recent evolution in H3N2 viruses.

And one of the interesting things about those virus is if you grow them in eggs, it's relatively easy to measure hemagglutinin inhibiting antibody against the virus. If you grow them in cells, and since ours is a cell based vaccine, you would intuitively think that influenza virus growing cells would be more sensitive for antibody responses to our vaccine.

In point of fact, it's not, it's the opposite, and one of the odd things that happens with that virus is that the hemagglutinin doesn't mutate in cells but the neuraminidase mutates himself. And it mutates in a way that lets the neuraminidase be about as sticky as the hemagglutinin and it glutenates red cells.

So, the hemagglutinin assay is undermined and doesn't work anymore. So, we did the experiment comparing cell derived virus and egg derived virus head-to-head which was in fact an experiment that FDA wanted us to do, I think probably for their own edification as much as ours and we prove that it -- we resulted in a major difference.

Well, okay that's very interesting. And then as you said it's unexpected. Good work there.

Yes, it's little counterintuitive but it's certainly worth knowing.

And one final question about the Ebola vaccine given that, there is just an article of nanoparticle medicine about the successfully marked vaccine done in the clinical trial in Guinea. And your reports show a very, very good robust immune response but they don't -- as the epidemic is waning, it's really impractical to do a trial, indeed (inaudible, what do you see now as the path to market for the Ebola vaccine?

Yes, George. I think that the -- we're talking with various agencies that might be interested, including our friends at BARDA and other U.S. government agencies. So that's the pathway, the pathway to licensures, is likely through what's called the animal model where you do determine levels of antibodies that are protective in nonhuman primates and then show that you get that level in human trial and larger trial that we did.

We have a very good vaccine we think and now it's a matter what's the best way to take advantage from this perspective.

Our colleagues at CBER have already recognized this is going to be a problem that as epidemics of emerging viruses like Ebola winning away. We know those viruses are still a threat. We need to develop vaccines for them. The once they exist even though successful are not satisfactory in a number of ways and so we need to have a pathway for developing those vaccines.

And CBER has already held at least one extended session at its last [VERPAC] meeting in which it discussed exactly what Stan said, the development of nonhuman primate models in which you can identify antibody or other types of immune responses that correlated with protection and then bridge those to responses that could be demonstrated in humans and use that as a means of achieving licensure.

Okay, great. Good luck with that too and thank you again very much for taking my questions.

(Operator Instructions) Our next question comes from Heather Behanna of Wedbush. Your line is open Heather.

Hi guys, thanks for taking a follow-up, I just wanted to go back and ask another question about the ITT population for RSV. When you think about I know that the lower respiratory was in Ad-Hoc analysis but I was curious if you were able to hit statistical significance in both populations on that endpoint and how it differed from the overall, and when you think about moving forward is the lower respiratory would that be something you might focus on a primary endpoint for Phase 3?

The answer is, you know again, I'll echo what Greg said, the answer -- first of all there was very little divergence in those analyses no matter what they used the per protocol or the ITT population. I don't have the exact percentages burned in my brain but 1% to 2% difference at most.

And yes for us one of the lessons was that probably focusing on the more severe endpoints is probably a very good primary endpoint. Frankly, the impact on the all disease endpoint was also fairly impressive given that the past history of RSV vaccines is lack of demandable activity at all.

So I think we will consider both of those but yes we are looking at more severe disease as a primary endpoint and the all disease as a secondary endpoint as we go forward.

Great, thanks. I look forward to more color at the Analyst Day.

And I'm showing no further questions at this time. I would now like to turn the conference back over to Stan Erck, CEO.

Great, well thank you. I note on our little screen here that we have record number of viewers today, and participants, so that's great. It's always fun to come out with great data. We'll hope to do it for you again sometime. Talk to you soon.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.