Novavax Inc (NVAX) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Novavax fourth quarter and full-year 2015 financial results call.

(Operator Instructions) As a reminder, this conference is being recorded.

I would like to introduce your host for today's conference, Ms. Andrea Flynn, Senior Manager of Investor Relations.

Ma'am, please begin.

Thank you, Operator.

Good morning.

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 fourth quarter and full-year 2015 financial results.

A press release about earnings is currently available on our website at novavax.com and an audio archive of this conference call will be available on our website later today.

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

Before we begin our prepared remarks, I need to remind you that we will be making forward-looking statements during the 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.

Thanks, Andrea, and good morning, everyone.

We are pleased to be on the line again today to review another eventful quarter for Novavax.

Demonstrating our team's continued execution during the quarter, we participated in two End of Phase 2 meetings with the FDA, and subsequently initiated two pivotal Phase 3 trials of our RSV-F Vaccine.

The first named Resolve is a trial to demonstrate protection against RSV in older adults, and the second, named Prepare, is a trial to demonstrate protection of infants via maternal immunization.

I'd like to point out two recurring themes at Novavax that we've demonstrated over recent years.

First, we continue to use breakthrough science to create new vaccines, and second, we combined this with unparalleled execution.

As an example, with respect to our RSV-F Vaccine for older adults, we recruited and vaccinated 11,850 volunteers, 60 years and older, for the Resolve study in just five weeks.

This allowed us to have the study population vaccinated before the start of the 2015-2016 RSV season.

We can now project that we will complete the study and report our first pivotal efficacy data by the end of the third quarter of this year.

On top of this, again following our second End of Phase 2 meeting in November with the FDA, we were able to initiate our Phase 3 RSV-F trial in pregnant women in the US in December followed by the expansion of that trial into South Africa in January.

Based on this progress, we are well positioned for significant and potentially value creating data announcements later in 2016, and assuming positive data, we expect to be in a position to file our first BLA in 2017.

Also, we recently strengthened our balance sheet through the successful completion of a convertible notes offering.

This allows us to aggressively advance our programs to the market, maintain our substantial lead over our competitors, and to consider appropriate partnering opportunities from a position of strength.

As announced earlier this year, we have initiated discussions with a number of potential partners for the ex-North American commercialization rights to our RSV-F Vaccine franchise.

We believe our development plans have created significant value to-date.

We made the decision years ago not to engage in partnering discussions until we had substantially de-risked the program in an effort to maximize the value of the asset for our shareholders.

With the successful completion of the Phase 2 trial in older adults with its first ever efficacy data against RSV in any population, and the initiation of pivotal Phase 3 trials, we have now initiated partnering discussions.

As we evaluate the commercial opportunity in different geographies, we believe the best strategy to accelerate product launch and maximize its value outside of North America is to partner with companies that have the existing infrastructure and experience to deliver on the promise of this product opportunity.

As the recognized leader in RSV vaccine development, we remain ideally positioned to launch this product in North America.

I will ask Greg to start with a quick review of our programs, with a focus on our RSV-F Vaccine programs.

Then Buck will provide an overview of fourth quarter financial results.

And then finally, I will wrap up and then open the line up for questions.

With that agenda, let me hand the call over to Greg.

Thanks, Stan, and good morning, everyone.

I'll begin my comments with an update on our RSV vaccine program.

Full enrollment of the Resolve trial, our Phase 3 trial in older adults prior to the RSV season was critical, and I'm pleased to report we initiated and completed enrollment.

I want to, again, thank our team here at Novavax and experts in the field for their dedication and hard work as enrollment in such a rapid timeframe is a significant accomplishment.

Let me remind you that RSV infects over 2.5 million older adults every year in the United States alone, with an estimated annual cost burden in excess of $28 billion.

According to the CFC, the disease causes 207,000 hospitalizations and 60,000 deaths among adults older than 65 every year.

There are also roughly 900,000 medical interventions that are directly caused by RSV disease annually.

Resolve is a randomized, observer-blinded, placebo-controlled trial designed to enroll 11,850 adults, 60 years of age and older at 60 sites in the US.

The primary efficacy objective of the trial is prevention of moderate to severe RSV associated lower respiratory tract disease as defined by the presence of multiple lower respiratory tract symptoms and signs.

The second objective is the prevention of all acute symptomatic RSV respiratory disease.

The trial has been designed based on the Phase 2 results we have previously discussed in which we were able to describe the RSV attack rate, vaccine effect, and case definitions.

As a reminder, in that Phase 2 trial we followed 1,600 subjects with active surveillance throughout 2014/2015 RSV season.

We found that 4.9% overall incidence of RSV, among which 1.8% moderate to severe cases were noted as mentioned by multi-symptomatic lower respiratory tract disease.

We are closely monitoring several different RSV surveillance systems for the 2015/2016 season, and like influenza, the intensity of the annual winter time, national RSV season tends to be relatively consistent year-in and year-out, and to-date, this RSV season is indeed consistent.

Based on objective data from RSV alert and CDC's National Respiratory and Enteric Virus Surveillance System, the percent of RSV-positive tests is generally consistent with the 2014/2015 season in the prior five years.

That gives us additional confidence in the success of our trial.

Given the consistent RSV surveillance between this season and last season, we expect a similar incidence of all acute symptomatic RSV disease around 4.9%, and 1.8% from (inaudible) severe RSV.

As a reminder, in the Phase 2 trial we observed a 41% vaccine effect in ITT populations against overall RSV illness, and a 64% (inaudible) against moderate to severe RSV associated lower respiratory tract disease.

The Resolve trial is well designed with a greater than 90% [pair off] for the primary objective, and 85% [pair off] for the secondary objective.

Because we are using the same surveillance methods and analyses of detectable viruses used in the Phase 2 trial, we expect to reproduce the efficacy data in our Resolve trial.

With enrollment completed on time, we still expect to report top-line results in the third quarter of 2016.

We will use this data to support our BLA application we plan to file in 2017.

We also initiated a Phase 2 rollover clinical trial of our RSV F Vaccine in older adults during the quarter.

This trail is a randomized, observer-blinded, placebo-controlled trial designed to enroll the same adults 60 years of age and older who participated in the Phase 2 trial.

We have successfully completed enrollment of this trial with 1,330 older adults.

The primary endpoints of the trial will evaluate the safety in serum anti-F IgG antibody concentrations in response to re-vaccinations after [assessing the] RSV season.

Results of this trial are expected in the second half of 2016.

Safe data from this trial will support discussions with regulatory agencies [at the meeting] as we seek a recommendation for annual seasonal vaccine in older adults.

Moving on to our RSV program for infants via maternal immunization, we initiated enrollment in a global pivotal Phase 3 clinical trial known as Prepare during the fourth quarter ahead of guidance.

As a reminder, RSV is the most common cause of lower respiratory tract infections and is the leading viral cause of severe lower respiratory tract disease in infants and young children worldwide.

In the US, RSV is the leading cause of hospitalization in infants, and globally is second only to malaria as the cause of death in children under one year of age.

In spite of the induction of post infection immunity, repeat infections and lifelong susceptibility to RSV is common.

Prepare is a randomized, observer-blinded, placebo-controlled trial that utilizes a group sequential design, offering flexibility in trial size that is responsive to the rate of endpoint events and evolving evidence of efficacy while maintaining the trial's blinding integrity.

Thus, the eventual sample size may vary between 5,000 and 8,255 pregnant women over a period of two to four years.

Participants are being vaccinated at a number of global clinical sites in advance of each RSV season.

The primary objective of the Prepare trial is to determine the efficacy of maternal immunization with the RSV vaccine against symptomatic lower respiratory tract infection with hypoxemia in infants through the first 90 days of life.

We believe that maternal immunization offers the optimal way of protecting young infants who are among the most susceptible populations to RSV disease.

We are also pleased that the FDA granted Fast-Track designation for this program in 2014, which we believe validates a significant unmet need in this population.

As a reminder, Novavax was awarded a grant of up $89 million from the Bill & Melinda Gates Foundation to support development of this RSV F Vaccine for infants via maternal immunization.

As you can imagine, the majority of our resources are currently dedicated to our RSV F Vaccine Phase 3 trials.

However, we are continuing to develop our RSV pediatric clinical development plan, and expect to provide additional guidance in the second half of this year.

Now, with respect to our influenza program, we previously reported positive results from a Phase 2 clinical trials in recombinant quadrivalent seasonal and pandemic influenza vaccines.

As a reminder, our influenza programs are being conducted under the Company's contract with our partner, BARDA.

We are continuing to complete review of these data with our partner BARDA to determine the path forward for both influenza programs.

We expect to continue discussions with BARDA and present plans for continued clinical and product development over the next several months.

We also continue to work on plans for conducting a clinical trial with a new combination respiratory vaccine that will combine multiple strains of our seasonal flu vaccine with our RSV vaccine.

We anticipate initiating a Phase 1 trial in healthy volunteers in the first half of 2017.

I would like to say a brief word about the Zika virus.

As you all know, we have demonstrated our unique expertise of our technology platform for the rapid development of vaccines against emerging disease threats.

We also have unique experience in vaccine development for women of child bearing age, which may be important with the Zika virus.

Although we have no formal plans beyond preliminary discovery efforts, we have initiated an early state Zika vaccine program with the goal of rapidly progressing through animal studies and some early process development activities.

We will work with various government and non-government groups to determine the pathway forward to fund a large scale production and clinical trials.

With that update of our key programs, I will now turn the call over to Buck.

Thank you, Greg, and good morning, everyone.

Today we announced the financial results for the fourth quarter and full-year ended December 31, 2015.

Summary financial statements can be found in today's earnings press release.

My comments today will focus on three topics; a note on the presentation of the statement of operations, the financials for the fourth quarter of 2015, and an overview of our recent convertible note offering.

Let me start my comments by noting that we have updated our statement of operations reporting format in both the press release and the 2015 10-K to be filed with the SEC in order to conform to biotechnology and pharmaceutical industry financial presentation standards.

In prior financial reports, we have included an expense line item titled Cost of Government Contracts Revenue.

These expenses consisted of certain reimbursable R&D costs incurred under our contract with BARDA and related to the revenue line item titled Government Contracts.

While Novavax has reported these expenses separately in the past, it is not industry practice to break these expenses out of total R&D expenses, and we believe it is more appropriate to classify them as R&D expenses.

We will continue to comment as appropriate on material period-to-period variances in expenses and revenue related to our government contracts at both our quarterly earnings calls and in our SEC filings.

With that background, let's step into the review of the Company's fourth quarter 2015 financial performance.

For the fourth quarter of 2015, we recorded a net loss of $78.8 million or $0.29 per share.

This compares to a net loss of $31.5 million, or $0.13 per share, in the prior year period.

The increase in net loss in the fourth quarter is primarily the result of increased R&D expenses related to the clinical trials of our RSV F vaccine candidate and higher employee related costs relative to the same period last year.

I will expand on the specifics of those cost increases over the next few minutes.

Revenue for the quarter was $5.9 million compared to $6.7 million for the same in 2014.

This 13% decrease in revenue in the fourth quarter of 2015 is driven by the lower level of activities under the BARDA contract in the fourth quarter of 2015, relative to the level of activities in the fourth quarter of 2014, which resulted from the initiation of our Phase 2 quadrivalent seasonal influenza vaccine clinical trial in that period.

The decrease in BARDA revenue is partially offset by recognition of revenue in the fourth quarter of 2015 of approximately $1.6 million under the Bill & Melinda Gates Foundation grant of $89 million.

The BMGF revenue is directly related to the initiation of the global pivotal Phase 3 clinical trial known as Prepare of our RSV F vaccine candidate for maternal immunization.

As we look forward to 2016, we should expect a significant increase in BMGF revenue, which will correlate into costs incurred in the Prepare trial.

R&D expenses increased to 128% to $75.9 million in the quarter compared to $33 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, along with higher employee related expenses, which include an increase in non-cash stock compensation expense.

Specifically, these R&D expenses were related to the initiation and full enrollment of 11,850 participants in the Resolve trial, which was initiated in November and fully enrolled in mid December.

Resolve is the primary contributor to the increase in R&D project related expenses in the fourth quarter of 2015.

As you know, we also initiated the Prepare trial, which also contributed to the increase in R&D project related expenses in the fourth quarter of 2015.

These increases in R&D project expenses were partially offset by a decrease in influenza project expenses under our BARDA contract with BARDA.

R&D employee related costs increased in the quarter relative to the same period of 2014, primarily due to the growth in headcount required to execute and support our development activities, including the Phase 3 clinical trials previously discussed.

At December 31, 2015 we had 369 employees dedicated to our research and development programs, versus 261 as of December 31, 2014.

The R&D head count growth occurred across the board, including clinical operations, regulatory affairs, analytical development, process development, quality assurance, quality control, and manufacturing.

G&A expenses increased 75% to $8.9 million in the quarter compared to $5.1 million in the same period in 2014.

This increase is primarily due to an increase in employee related expenses, which include an increase in non-cash stock compensation expense as well as increases in pre-commercialization expenses.

At December 31, 2015 we had 49 employees dedicated to general and administration functions, versus 35 as of December 31, 2014.

Increases in employee related expenses for both G&A and R&D were primarily driven by growth in headcount necessary to support our expanded project development activities and the maturation of the Company.

One key non-cash component of expense growth on a year-over-year basis is the growth in non-cash stock compensation expense, which increased from $6.1 million in 2014 to $13.4 million in 2015.

As of December 31, 2015, the Company had $230.7 million in cash, cash equivalents and investments on the balance sheet.

In late January, Novavax strengthened its balance sheet through the issuance of $325 million in convertible senior notes, which resulted in final net proceeds of approximately $276 million.

These proceeds further strengthen Novavax's balance sheet ahead of data from the Phase 3 Resolve trial expected in the third quarter of 2016, and in support of discussions for commercialization rights to its RSV F Vaccine franchise outside of North America while minimizing dilution.

The initial conversion price of the notes was set at $6.81 per share, representing a 22.5% premium to the last reported sale of Novavax's common stock of $5.56 on the day of pricing.

The net proceeds of the offering were approximately $315 million, after deducting initial purchaser's discounts and commissions, but prior to deducting offering expenses.

Novavax used approximately $38 million of the net proceeds from the offering to purchase a cap-call, which will function to reduce dilution from the issuance of additional shares upon the conversion of the notes between the price of $6.81 and a cap price of $9.73 per share.

The resulting net proceeds after the purchaser's discounts, offering expenses, and cap-call transaction were approximately $276 million.

The timing of the offering was optimized to enhance our balance sheet as we engage potential partners in discussions for the RSV F Vaccine commercialization rights outside of North America, and to allow appropriate investment and pre-commercial activities.

Further, we believe conducting the offering in the first quarter of this year will lose any overhang from the anticipated announcement of our Phase 3 data in the third quarter of this year.

Finally, we believe the timing of the notes due in 2023 falls well beyond our expectations for the timing of the RSV F Vaccine commercial launch in older adults, providing the future cash flows necessary to cover the obligation.

This concludes my financial review.

I'll now turn the call back over to Stan.

Thanks, Buck.

We are incredibly excited about 2016.

Complete enrollment of Resolve takes us one step closer to bringing this important vaccine to license.

We look forward to another year with significant clinical data readouts and continued preparations for the transition to a commercial organization.

There I'll wrap it up and open it up to Q&A.

Operator?

Thank you.

(Operator Instructions) Our first question is from Jessica Fye from JPMorgan.

Your line is open.

I actually have a couple if that's all right.

First one is just on the financial side.

Can you help us think about R&D spend going forward?

Should we expect that it comes back in now that Resolve is enrolled, or is this the new run rate?

Second question; can you elaborate a little bit on the progress you've made in partnership discussions and remind us when you would ideally like to have a partnership in place?

I guess should we realistically expect that you wait for the Phase 3 data in order to maximize value?

And then finally, recognizing that the FDA has agreed upon the definition of success for this clinical study Resolve, are there any other factors that we should think about as it relates to you ultimately gaining an ACIP recommendation, i.e, does the magnitude of benefit in Phase 3 play a role there when it comes to actually getting that recommendation?

With regard to your first question on the R&D spend, obviously fourth quarter was a big quarter for us in R&D spend.

We've talked many times in the past about the profile of spend for clinical trials, and we usually see the majority -- or we see a significant percentage of the spend profile occurring in the months immediately before the initiation of the clinical trial and then into full enrolment.

So, the two big drivers in fourth quarter were the Phase 3 older adult trial, and then to a smaller degree the ongoing Phase 2 rollover trial and the initiation of the maternal immunization trial.

All those trials were initiated and were ongoing in the fourth quarter.

When we look into Q1 and Q2 of the New Year, we should expect that all three trials are ongoing and that you should expect that we'll continue to invest in those trials.

As we get to the end of the RSV season, obviously those trials will start to wind down as we're in data collection mode.

So I think it's fair to believe that the first quarter and second quarter R&D expenses will be in line, give it plus or minus the fourth quarter R&D.

You should expect to see R&D decline, actually, in Q2 and Q3 as that big adult Phase 3 trial starts to wind down.

Let me rest with that.

We've thought a lot about the timing of our partnering discussions, as I mentioned in my prepared speech.

We wanted to get as much risk reduction and demonstration of efficacy as we could so that we could have serious discussions with the top players in the field, or the top wannabe RSV players in the field.

And so, we timed it so that we have that, and we've enrolled Phase 3. So, we think it's important to start those discussions now because we don't want to skip a beat about entering commercial entry into non-US markets.

We think that potential partners will be starting to think about how to do that [and it] will affect the discussions that we have.

And so, now is the time to do that.

And so that they can have an influence over the regulatory file in non-US-based countries, and so I think it is a good time to do that.

We recognize, of course, that we've got important data coming at the end of the third quarter, and some people will either want to wait for that or structure a bid around the data.

And so, we'll see how hat plays out.

But now is the time to start doing this; these discussions take time and, as I said, we don't want to miss a beat getting into non-US markets.

And maybe Greg can answer the third question.

I didn't hear the very end of your question, so maybe you can just -- would you remind restating your third question for me?

Yes.

Is it just hitting and have a positive result on Phase 3 that's important from the standpoint of getting an ACIP recommendation?

And/or how does the magnitude of benefit you demonstrate in Phase 3 factor into those decisions by that committee?

I can't predict what the ACIP will think is important.

I think it is obviously essential we have a good Phase 3 pivotal efficacy result, and we believe that at this point that the burden of disease is so significant for RSV in that population that that result should be a compelling result.

We also know that they will look at cost benefit of these vaccines, and we're certainly collecting some of that data as exploratory end-points that support that case.

And in addition, we know of other studies going on in the world of epidemiology that will further support the cost/benefit of our vaccine.

I think those are features that will be discussed at the ACIP level and will be very important.

In addition, as you probably know, our target product profile at this point is an annual seasonal vaccination.

They were gaining from the E202 trial where we're boosting the subject from the E201 we think will also be quite important to demonstrate the safety and immune benefit of a second dose.

So, I think those will be topics, obviously, that is exactly what we are looking for in terms of making our plans; what data will we want to be able -- and be able to present at ACIP.

And I think we have those items well in hand in terms of how we've structured our data collection and how we are looking for support from key opinion leaders who are doing epi studies, et cetera.

Maybe just a follow up on that.

Is it your expectation that you might be able to get on the ACIP calendar to have them start looking at your results prior to an FDA decision, or is that going to happen after the FDA [and the] regulatory cost?

Yes.

We expect to be typical, that would typically follow FDA approval of our vaccine.

So that would be our first milestone and then to have an ACIP meeting following that.

Thank you.

Our next question is from Ed Tenthoff of Piper Jaffray.

Your line is open.

My congrats on just a lot of progress toward the end of the year and I'm really excited about the (inaudible) ongoing.

I guess my first question had to do with the Phase 2 repeat dose for second administration RSV study with about 80%-some, or the 1,300 patients, what kind of powering do you get with that number of patients in the study, and how does that sort of help with respect to the data presentation to the agency?

That trial -- the primary objectives there are safety and immunogenicity, and so we are not expecting to say much about the vaccine efficacy, because as you pointed out, the power can be quite small for that.

We will look, but that was our expectation.

But we hope -- our general strategy is one hopes that you can describe a core of protection, or a relative [core] of protection with immunogenicity.

And so, as we develop the data for the 301 trial, we will be looking for that and that will reflect on what we see in the booster trial.

Of course, we will do surveillance, we are doing surveillance.

You note that we report, we did recruit 1,330 of the subjects, which for a trial of this -- I think is very, very good performance if these are old people, and so -- but we are not going to expect the surveillance rates to really change.

So, this will be really an exploratory objective, but we'll look at the same objectives that we are in our primary and secondary in the 301 trial.

But we don't have an expectation to be able to say definitely about the efficacy of [enough], for example, the second dose.

We do hope that the immunogenicity will be meaningful in the context of core protection, which will be determined in the E301 trial, which is obviously seized to be able to do something like that.

And then if I may, just a quick question with respect to flu.

Obviously, the focus has been more RSV for the back half of last year.

Can you give us a little bit more color on timing and what potential outcomes are?

I mean, it seems to me like these seasonal and pandemic flu vaccines are coming up on potential registrational studies, so is that really what these discussions are about; trying to figure out path to licensure?

It is a combination thing.

Over the past two or three years working with BARDA, we have gotten to the point where last year we reported data on the 206 trial, which is very good data on all four strains.

But in addition, both on the work of our nanoparticle vaccines for RSV and Ebola and additional data that we got from flu, we are talking to BARDA about what the pathway to licensure should be with a flu vaccine based upon what we've learned.

We are thinking about making changes to it and what those changes would have on the impact on the design of the next trial.

So, that is what we are talking about.

We are conducting some animal studies, we will have some data in the next month or two, and we'll give you a much more definitive answer at that time.

Thank you.

Our next question is from Bill Tanner with Guggenheim.

Your line is open, sir.

Greg, I had one for you and I probably should know the answer, but you mentioned that the RSV study is powered at 90% to show efficacy with an attack rate of -- that you had in the Phase 2. So I'm just wondering, what is actually the relationship between the powering and the attack rate?

So, let's say the attack rate is 4.5% rather than 4.9%; what does that do to the powering?

It does decrease the power to detect the vaccine effect.

I would just say we took that into account, that is why we have powered this trial very well for both the primary and secondary.

Remember the primary is powered over 90% and the secondary in the mid-80%s.

So, if there is some decrease in the attack rate there is a decrease in the power to detect.

And so, we took that into account and that is why we -- in fact, you probably saw, we increased the sample size from our pre-FDA meeting guidance to what we actually achieved, so to make sure we were very comfortable with some variability in the RSV attack rate.

But that being said, I think we've provided some guidance.

The RSV season seems -- it appears to us to be very predictable; that is certainly true of this season.

It looks like past season, and I think that is going to be reflected in the attack rate we detect through our surveillance system.

And, Greg, that attack rate or, sorry, that predictability, I mean, that is still just based on CDC surveillance, right, that's looking at --?

Right.

And so presumably, the tighter the percentage of blood samples that have an anti-RSV titer are predictive of what the actual attack rate is?

That relationship, if you look over the past five years, the national statistics for the onset and the rates of RSV, in our view, are very consistent.

And then, Stan, I had one for you just as it relates to the partnering discussions, and then the commentary made about the pentavalent.

How does that actually play into discussions with companies about the RSV vaccine as a standalone?

I mean presumably, some of the folks you might be talking to do have seasonal flu vaccines, so would it be contemplated that you might do something with a company around the RSV as a standalone as well as the pentavalent?

That's a great question.

Of course, I don't know the answer to that yet.

Obviously, there could be an interest in a combo as well, so those discussions are yet to be had.

Thank you.

Our next question is from Joel Beatty of Citi.

Your line is open.

First, another question on RSV surveillance for this season.

Can you talk about the timing of the onset of the peak season and how it related to the completion of the vaccination in the Phase 3 elderly trial?

What happens in the trial, the mechanics are the surveillance starts two weeks after a subject is immunized.

So, as the subjects rolled into the trial, surveillance began.

We did have the bulk of our recruitment done by December 1. We trickled into couple more weeks as we filled up the groups with the over 75.

As you may recall, we pre-specified for this trial to have around 25% of our subjects over 75-years of age, because that population does have more severe problems with the RSV.

I think, if you look at the timing in the graphs, the upswing of the RSV season, it looks very much like we began our surveillance right at the perfect time.

Now, just keep in mind when you look at surveillance, that is done in pediatrics.

This has historically been based on the antigen tests used in the ERs and doctors' offices at certain sites throughout the US.

And that's been mixed in with some PCR, but it is pediatric surveillance system.

It's generally thought there's a couple week lag between the -- as you might expect the RSV is generally spreading from children to older adults.

And so our view is that we actually got in at the perfect time in terms of the timing of the annual seasonal epidemic of RSV.

So, we are feeling very good about the timing of the onset of surveillance and the seasonality.

Again, we have five-year pattern of surveillance, and it looks very similar to what we saw in past year and past five years, frankly.

So, I think we are feeling very comfortable where we are at with surveillance onset and the incidence of RSV disease as detected by the surveillance networks in the US.

I guess also just one follow-up question on the maternal immunization Phase 3 trial; how is enrollment going in that trial?

And then also, what affects the eventual number of patients between the 5,000 to 8,000 range?

Good question.

So, just to reiterate; we were giving guidance for starting that trial in quarter one, and just to remind you, we were able to start that in quarter four.

And I would say, again, we're feeling very comfortable with how that starts.

I don't think we're going to provide enrollment updates for that trial.

But, again, I think the execution team is on it and we're, again, thinking that that's going as we hoped it would.

I am sorry, what is the second question?

What determines 5,000 to 8,000?

So, as a group sequential trial design that allows us to have periodic reviews by our DSMV that we're blinding to, and they are going to look at safety and efficacy, basically utility or vaccine efficacy.

So, at a point when the vaccine efficacy is considered positive, that's when the trial can shutdown.

So, the group's sequential design allows us to accommodate tap rates, variances in attack rates as well as the vaccine in fact.

And so, the combination of those issues as they unfold allow us to take periodic looks.

So we are estimating as we gave guidance somewhere between 5,000 and approximately 8,000 subjects have been recruited.

Now, if the -- obviously the driver for a lower number would be a high vaccine efficacy, but still it would be positive, of course, if there is 8,000 recruited.

So, those are the factors that drive those total numbers in time to a completion of those trials.

Thank you.

(Operator Instructions) our next question is from Heather Behanna, Wedbush.

Your line is open.

I just had a couple questions.

One, with the Phase 3 enrollment done, if you could just sort of comment on the population, how it compares to Phase 2 as far as age and any other factors we should think about when we're thinking about the potential for moderate to severe RSV in the population?

Hi, Heather.

Greg again, thanks for the question.

So, as I mentioned, more or less, we reflect the population we saw in the E-201 trial, which are 60-plus, stable heart and lung disease, ambulatory.

In this population, in the E-201 we had about 17% of the subjects were over 75-years of age.

We wanted to bump that up to get closer to the census number for over 75-years, which is about 30%.

So, we recruited approximately 25% of subjects over 75.

Now, we looked in the data we have in terms of immune response, we didn't really see any decrement in that population, so we felt quite comfortable going forward with that.

There is a higher rate of more severe outcomes in the over 75 age group based on epidemiology studies, and we felt that that was an important population to try to address with a little more robust data in a sub analysis when we were done with the trial.

So, that was the rationale for recruiting a little heavier in the over 75 ambulatory patient population.

Just one follow-up on the question with the AICP recommendation that would come after approval.

If you could just comment on any sort of education work or things going on with the CDC before approval that you can do to sort of position the vaccine and the potential for a recommendation?

You are right.

There are activities that go on in terms of providing some education and background, keeping the CDC apprised of the activities.

I don't think we're really talking about what we're actually precisely doing, but we know that there are some immediate steps that have to go on in terms of letting them know we're working on this problem, providing them information on some views of the disease burden and intimates of the RSV vaccine.

We are fully engaged in that, of course, we have in our sights our plan to present our program to ACIP as we think they're obviously a critical group as a first step to recommend this vaccine.

So, I don't think we can comment with any more detail on our activities.

I think we've announced and we are doing, we have announced this over a year ago, year and a half ago we hired a senior vice president of commercial operations.

Since then we've -- in fact, we pointed out in this press release, or this script, that we have hired a couple senior marketing people to do exactly that, to gather the KLLs of the world and start education.

We have a long process with the ACIP prior to BLA approval where we work -- they [involve our] working group and we educate them, and so, it is a long process.

The first step, though, is to form an RSV working group at the CDC and we know there is activity in that arena.

Thank you.

At this time I show no other questions in queue.

I would like to turn it back to Mr. Erck for any closing comments.

Thanks, everybody.

We had a great quarter; looking to report more throughout the year.

Thanks.

Ladies and gentlemen, thank you for your participation in today's conference.

This concludes your program.

You may now disconnect.

Everyone have a great day.