Novavax Inc (NVAX) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen.

Welcome to Novavax First Quarter Financial Results Conference Call.

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

Later, we will conduct a question-and-answer session and instructions will be given at that time.

(Operator Instructions) As a reminder, this conference call maybe recorded.

I would now like to turn the conference over to Andrea Flynn, Investor Relations.

You may begin.

Thank you, operator and good afternoon.

This is Andrea Flynn, Associate Director of Investor Relations at Novavax.

I would like to thank everyone for joining today's call to discuss our first quarter 2016 financial results.

A press release of our 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 Commercial Operations, John Trizzino; 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 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.

Thanks Andrea.

Good afternoon, everyone.

Once again, I'm pleased to be on the line with you today.

This first quarter has essentially been focused around four major undertakings here at Novavax.

First, the continued execution of our two ongoing pivotal Phase 3 trials of our RSV F Vaccine, the tremendous efforts across virtually all functional areas of the Company to prepare for our first vaccine BLA submission in 2017, our process for seeking a potential partner for ex-North American commercialization rights to our RSV F Vaccine franchise and an update on our pre-commercialization activities.

With regard to the clinical trials, Greg is going to discuss these and other activities in greater detail, but let me remind you about each of the two Phase 3 trials.

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

We're pleased to report that given our progress, we're on track to complete the Resolve study and report our first pivotal efficacy data in the third quarter of this year.

Positive data from that trial will put us in a position to file our first BLA in 2017.

We also are conducting the Prepare trial for the protection of infants via maternal immunization with participants currently in the United States, South America, Africa and Australia, and we're now working to expand that trial into Mexico, Europe and Asia.

With ongoing support from the Bill & Melinda Gates Foundation, we expect to continue enrollment in all of these global locations.

My best guess is that we'll report on preliminary results from this trial in 2018.

Turing to partnering, I mentioned during our last call that we had initiated discussions with a number of potential partners for the commercialization rights to our RSV F Vaccine franchise outside of North America.

Those discussions continue, and I've been impressed by the interest from a number of multinational world class vaccine companies who recognize us as a leader in RSV vaccine development.

We continue to believe the best strategy to accelerate product launch and to maximize this Vaccine franchise's value is to have Novavax launch this product in North America and to partner with companies that have the existing infrastructure and experience to deliver on the promise of our program, globally.

I'm sure that you have a lot of interest in status of those discussions, and I'm also sure that you'll appreciate that I'm not able provide any details at this time.

In addition, as we discussed on our last call, during the quarter, we successfully strengthened our balance sheet through $325 million convertible note offering.

This allows us to continue to advance our programs and maintain our substantial lead over our competitors.

Shifting gears a bit, I think it's time for us to introduce you to John Trizzino, who is been leading our efforts preparing for commercialization of our first product.

John is Senior Vice President of Commercial Operations, with a great background in the commercialization of RSV and influenza products.

I'll now ask John to provide a brief update on our disease state awareness campaign and other related commercial activities.

After John, Greg will talk briefly about the status of our clinical programs, and Buck will provide an overview of first quarter financial results.

Finally, I'll ramp wrap up and then open the line for questions.

Thanks, Stan.

Good afternoon.

Well in advance of our product launch, there are a host of activities that need to take place to prepare the market for a new product.

This is particularly true for the launch of the first vaccine for major disease.

With this in mind, our commercial regimen strategy has us deeply involved with policy initiatives, payer and pricing strategy, key opinion leader, and health care provider advocacy, and mostly, staying focused on delivering the health benefits in the older adult target population.

Today, I would like to announce our disease state awareness campaign to educate healthcare providers on the burden of RSV disease, which includes our new website discoverrsv.com; again, that's discoverrsv.com which launched today.

This disease state awareness campaign also includes an informational booth at major conferences.

Of note, we will be at the American College of Physicians Internal Medicine Annual Meeting in DC later this week and at the International BIO Conference in San Francisco in June.

Furthermore, we are conducting a pharmacoeconomic studies to verify and document the economic burden associated with RSV in older adults, as well as to provide guidance regarding a pricing and payer strategy.

We are also working with a CDC on RSV disease burden evidence generation, and we're optimistic that this will lead to the creation of an ACIP RSV working group this summer.

You may recall that ACIP, the Advisory Committee on Immunization Practices, is the group that advises the CDC and major payers in the US, including Medicare, on recommendations for vaccine use.

All of these activities support our commercial strategy in preparation for the launch of our RSV vaccine in older adults, planned for 2018.

Now I will turn the call over to Greg to provide a quick review of our programs.

Greg?

Thank, John, and good morning, everyone.

I will begin my comments with an update on our RSV F Vaccine program for older adults.

As a reminder, 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 CDC, the disease causes 207,000 hospitalizations and 16,000 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 that enrolled 11,850 adults, 60 years of age and older at 60 sites in the US.

The primary efficacy objective of this trial is the 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 secondary efficacy objective is the prevention of all acute symptomatic RSV respiratory disease.

The trial was designed based on prior Phase 2 results, in which we were able to describe the RSV attack rate, vaccine effect, and case definitions.

With respect to this year's attack rate, we will continue to closely monitor several different RSV surveillance systems for the 2015-2016 seasons.

Unlike influenza, the intensity of the annual national RSV season can see relatively consistent year-in and year-out.

And today, this RSV season has remained consistent with previous years.

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

This gives us additional confidence that we will accumulate enough events to evaluate the efficacy of our vaccine in this population over a single season.

But let me remind you, we remain blinded; on day first, we finished our surveillance of the enrolled participants and PCR testing is now underway.

We expect to provide top-line efficacy results of the seminal trial in third quarter this year, in-line with the prior guidance.

These pivotal efficacy results will support filing of our US BLA in 2017 as well as other global licensor applications.

In addition to Resolve, we have an ongoing Phase 2 rollover clinical trial of our RSV F Vaccine in older adults.

Data from this trial will support discussions with regulatory agencies, advisory committees like ACIP, and the payer community as we see the recommendation for the annual seasonal vaccine in older adults.

The trial itself is a randomized observer-blinded placebo-controlled rollover trial, which targeted the enrollment of the same adults 60 years of age who participated in the prior Phase 2 trial.

We have successfully completed enrollment of this trial with 1,330 older adults, which exceeded our expectations for enrollment.

The primary end-point of the trial will evaluate the safety in serum anti-F IgG antibody concentrations in response to revaccination in the second RSV season.

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

Now moving on to our RSV program for infants via maternal immunization; we initiated enrollment in a global, multi-year pivotal Phase 3 clinical trial known as Prepare during the fourth quarter.

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

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

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

Validating the need for a vaccine, Novavax has been awarded a grant up to $89 million from the Bill & Melinda Gates Foundation to support development of this RSV F Vaccine for infants via maternal immunization.

The Prepare trial itself is a randomized, observer-blinded, placebo-controlled trial that utilizes a [great] sequential design, offering flexibility in trial size that is responsive to the rate of endpoint events and the evolving evidence of efficacy while maintaining the integrity of blinded trial.

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

As Stan mentioned earlier, participants are being recruited and vaccinated at a number of global clinical sites based on the consideration of each region's RSV season, thus allowing the year-round enrollment.

We are working to expand a number of sites in countries that participated during the first global season and to add sites in additional countries as we enter into the second global season.

We will build on the experiences accrued in the first global season to continue towards successful execution in our second and third global seasons.

The primary objective of the Prepare trial is to determine the efficacy of maternal immunization with the RSV F 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 from RSV who are the most susceptible populations of this disease, and in general, the great momentum towards global acceptance of the use of maternal immunization has created an excellent environment for trial execution.

Moving to pediatrics; while we remain focused on our ongoing RSV vaccine Phase 3 trials, we recognize the value of pediatric RSV vaccine and are in discussions with regulatory agencies regarding our clinical development plans.

We expect to provide guidance on our clinical development plans in the second half of this year.

We recently met with two European national regulatory agencies, The Paul-Ehrlich-Institut in Germany and the Medicines & Healthcare Products Regulatory Agency in the UK.

And in that meeting, both the infant and maternal immunization and older adult programs were discussed.

Consistent with the FDA, both agents were supportive of each program, including clinical trial designs, trial endpoints and the proposed clinical datasets to support future marketing authorization applications; the European equivalent of a US BLA.

Importantly, both agents also agreed that our clinical development plan could support an annual vaccination statement in our label.

Moving to our influenza program; in recent meetings with BARDA, we have been discussing the next steps in both our seasonal and pandemic influenza VLP vaccine programs, and our preliminary efforts of developing influenza nanoparticle vaccines.

We expect that these discussions will continue through the year.

We also are continuing to work on plans for conducting a clinical trial for the combination of respiratory vaccine that will combine a version of our seasonal flu vaccine with our RSV vaccine.

Under ideal circumstances, we would plan to conduct a single clinical trial, including arms of a combination product and our seasonal influenza nanoparticle vaccine in the first half of 2017.

This trial would be the first of our seasonal influenza nanoparticle vaccine, which is a new approach that builds on advancements achieved with the RSV nanoparticle.

We will provide additional details on this approach at the upcoming Keystone Symposia to be held between May 22 and 26 in Cape Town, South Africa.

We have also begun to work on the zika vaccine, leverage our unique experience in the rapid development of vaccine against emerging disease threats.

As we discussed last quarter, we initiated efforts to develop a zika vaccine with a goal of rapidly progressing through animal studies and the early process development activities.

At this point, the vaccine is being developed as an envelope protein nanoparticle, and we expect to benefit from the use of our Matrix-M adjuvant.

This approach has been successfully used with 879 in Ebola, and we have confidence that it can be successfully used in other emerging diseases, including zika.

We will continue to work with various government and non-government groups to determine the pathway forward to fund larger scale productions in clinical trials.

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

Thank you, Greg, and good afternoon, everyone.

Today we announced the financial results for the first quarter ended March 31, 2016.

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

For the first quarter of 2016, we recorded a net loss of $77.3 million, or $0.29 per share.

This compares to a net loss of $24.4 million or $0.10 per share in the prior year period.

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

Revenue for the quarter was $4.2 million compared to $9.9 million for the same period in 2015.

This 57% decrease in revenue in the 2016 period over the 2015 period was driven by two factors.

Number one, a higher level of BARDA related activities in the first quarter of 2015 relative to Q1 of 2016, specifically the quadrivalent seasonal influenza vaccine trial, which we completed in 2015, and a onetime recognition of $3.1 million in revenue in the first quarter of 2015 associated with our quadrivalent seasonal influenza VLP vaccine trail, which was completed in 2012.

The decline in BARDA revenue in Q1 2016 was partially offset by $1.6 million in revenue recorded under the Bill & Melinda Gates Foundation grant of $89 million.

The BMGF revenue is directly related to the prepared clinical trial.

As we have discussed, we should expect an increase in BMGF revenue in 2016, which will correlate to the underlying costs incurred in the Prepare trial itself.

R&D expenses increased 143% to $69 million in the quarter compared to $28.3 million in the same period in 2015.

The increase in R&D expenses was primarily due to the increased activities in our ongoing RSV F Vaccine clinical trials and related development activities, along with higher employee-related expenses, which includes an increase in non-cash stock compensation expense.

The Resolve trial was the primary contributor to the increase in R&D expenses in the first quarter of 2016.

G&A expenses increased 80% to $10.5 million in the quarter compared to $5.8 million in the same period in 2015.

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.

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

The key non-cash component of expense growth on period-over-period basis is the growth of non-cash stock-based compensation expense, which increased to $5 million in the quarter relative to $1.9 million in the prior quarter.

As of March 31, 2016, the Company had $433.9 million in cash, cash equivalents, and investments on the balance sheet.

As we discussed last quarter, 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 $276.5 million after deducting operating expenses and the cost of the cap call transaction.

These proceeds further strengthened Novavax 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 vaccine franchise outside of North America while minimizing dilution.

This concludes my financial review.

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

Thanks, Buck.

As you guys might be aware, we are very excited about the coming year.

We're facing our first Phase 3 pivotal data and starting the preparation of our first BLA, and it's big time for the Company.

We're also excited about the possibility of bringing on a global partner that can help get the product licensed in countries outside of North America.

So, we are looking forward to another year with significant clinical data readouts and continued preparations for the transition to a commercial operation.

And we'll wrap it up there and open it up to Q&A.

Operator?

(Operator Instructions) Jessica Fye of JP Morgan.

I have just couple here.

The first is, on the prepared remarks, you sort of talked about how this year's RSV season was very consistent with the past couple of years.

Can you characterize whether you are more confident now that we've sort moved several months past the completion of enrollment there or kind of whether your confidence level has changed at all on the Phase 3 study Resolve?

The second one is, can you talk a little bit more about the rollover study and what data from that in particular do you think that ACIP and regulators will be looking for within that data set?

And is there any chance you could refine the timing on when we would see those data within the second half?

I think our confidence remains high, so it would be based on watching the surveillance from this year, which is beginning to - for the national surveillance, beginning to wind down.

We can see [they're] very much - very, I would say, consistent pattern of the infants of RSV across the US and we, as you know, have sites across the US.

So, I think we're at very good point.

We've just completed our own of the surveillance of the subjects of enrollment trial.

We have FDA and European authority buy-in, which for us is quite big.

The FDA on the trial design, the endpoints - the endpoints certainly narrow the findings that we had at the Phase 2 trial.

Phase 3 trial population is the same, we saw in the Phase 2 trial population is same as we saw in Phase 2. The recruitment is completely advanced in RSV season.

And we think the trial execution and season has really been ideal for conducting this trial.

So, I think we remained confident.

We have, as I mentioned, the PCR has begun.

That PCR had to be validated, which was completed, which is a monumental task.

So, we validated our PCR assays required with the FDA.

And I think we remain confident in going forward.

The rollover trial is a term for, which may be in Laymen's terms, I think [they had] said it as a boosting trial where we're looking for data on the annual seasonal use of our vaccine that will support us in the ACIP discussion about the annual use.

In this trial, we have reenrolled a portion, and I will say, a very generous portion of the subjects that we were able to enroll from the Phase 2 trial.

And they'll either - those group, as you recall, was a placebo-controlled trial, had one-to-one randomization.

So they're 800 per arm.

And the way we can now divide them up into four groups where they either receive the vaccine again, we will [in the vaccine], so the vaccine [should reach] after received it twice, or in the vaccine half that group who received no vaccine or in the placebo group, they received a vaccine for the first time or no vaccine.

So, we will able to evaluate the immunogenicity of the vaccine as a boost after the utilization in prior year.

I think this is going to be important for the CDC and the FDA, frankly, for safety and to show the merits of the immune response to the second immunization in a second year.

So, that leads is greatly important, and we discussed this, our clinical development plan, with the European authorities.

Well, they're quite supportive of our approach in general towards getting to license for the vaccine.

Can I just follow-up with one more?

You're so close to your Phase 3 data; how do you weigh the decision to partner before that data versus afterwards?

It seems like you may be able to capture a lot more value after the study reads out?

We all know, everybody knows, when the date is coming out.

And we all know the importance of the data, and we also know that partnering discussions take a long time.

And so, we want to make sure that we have the ability to draw out the best partner and understand their capabilities and understand what kind of terms that we can deal with once data are out.

I suspect, and I think I've said this before, that it's likely that a signing of a deal will be post-data.

I suppose someone could get aggressive and try to do something earlier, but our expectation is that the deal will be post-data.

Bill Tanner of Guggenheim Securities.

Stan, I had a question for you.

I was struck by your comment; I appreciate that you guys don't want to go into any detail about the partnering discussions, but I was at least struck by the word that you said you were impressed with partners.

I am wondering if there is any way you can kind of qualify that just in terms of the numbers of companies that are interested, or the level of engagement, just broad brush strokes.

And then I had a follow-up if I could.

I said no more details, but for you.

So, yes; impressed in terms of by the quality.

So, everybody knows the pharma world and the companies that are involved in developing vaccines.

And I think I am impressed by the fact that we're not just drinking our own kool-aid when we think that we're leaders in the RSV vaccine world; everybody else thinks we are, too.

And that's reflected in the quality of the meetings we're having with these people.

I think that's about as much details I can give you, but we're not having a difficult time attracting good conversations.

And then, I had a question maybe for John, just as you're thinking about the pricing work, to what extent is the attack rate actually going to be taken into account?

Because I am wondering if this is sort of an expected value kind of a thing that you've got, whatever the cost is going to be for somebody that can - an elderly person that contracts RSV infection, but the probability of them getting it is low.

Does that really factor into it, that extent what the attack rate, or is it really just if somebody does come down with an RSV infection, this is what it could cost to treat them?

The way that we've evaluated, both the frequency of burden of disease and the economics of burden disease certainly takes into consideration the attack rate.

So, we've looked at some published literature, significant amount of published literature, and have an attack rate that was an awful like what we saw in our Phase 2 trials.

So, this is around 5%, 5.5% attack rate.

And of course, we're at the most significant burden of disease is in the moderate to severe disease, and that will typically manifest itself in hospitalizations.

And so, the cost burden is reflected there in the medical interventions associated with the disease.

But in addition to that, the additional costs, the exacerbation of underlying conditions like COPD, things like frailty factors, things like impact to the family as a result of the disease to that particular individual.

So all these things come into significant affect on how we look at pricing strategy.

But also, I think we've also given a little bit of kind of book-ends as we look at pricing in the marketplace relative to things like high-dose flu relative to pricing of Prevnar in the marketplace.

And so we're getting a sense of where pricing will end up based upon the economics and direct cost burden and based upon marketplace comparables.

Ted Tenthoff of Piper Jaffray.

I guess I've two questions.

One, just with respect to payers looking at the Phase 3 data, I mean, obviously with the understanding that prevention is a lot cheaper than treating, especially for severe disease, how have those conversations - and I think you started to mention this with payers going - are they getting the value proposition around reduction in moderate to severe disease?

That's my first question.

And then, I guess my second question, Stan, is about a partnership, but a little bit more qualitative than detail-driven.

Since, so much of the clinical development is going to be advanced, what really are you looking for in an overseas partner?

You're doing the same thing that Bill was trying to do to me.

But, Ted, first and foremost, really, is a really strong partner with capabilities of introducing product into as many markets as possible, and one who can maximize the long-term revenues of this product.

This is an important product.

And so, that's really valuable.

The expectation, of course, is it's based upon the fact that we've made a very substantial investment in this program.

And by the time we get to Phase 3 data in the third quarter, we will have dramatically reduced any risk left in licensor of - and to be very clear, what the benefit of the program is going to be with Phase 3 pivotal data.

Our expectation is that the deal would reflect those values.

And I think it will dramatically change our cash and cash forecast once we do a deal.

As far as your question on payer strategy, let me go back to the time I made my prepared remarks about the importance and the difference of the vaccine space.

Some vaccines are very unique in the way that they are launched and unique in the way that they are recommended and then, of course, payer strategy.

So, with vaccine differentiation in mind, the policy piece becomes critically important.

So, the work that we have begun with the CDC, the work that we expect to continue with ACIP, is critical to the success of our product.

So, a policy recommendation for the ACIP is a cornerstone event for us.

And we're putting, therefore, the right priority against that effort.

With an anticipated initiation of a working group with ACIP, that will take place over the next - an evaluation period pre-launch, pre-commercialization.

They'll get a very clear window into RSV burden of disease and then the commercialization efforts around that in order to make their recommendation.

But once we have that recommendation that really opens the door to executing a very clear definitive care strategy.

So, we're talking about older adults; it's primarily in the Medicare space.

So, while we have a 60 and over target population, you're going to see all the 65 and over population being covered by Medicare, and you're going to see the 60 to 65 population being covered by private insurers.

And so, we recognize the importance of policy; we recognize the importance of payer strategy and that's why we're working so diligently ahead of launch to make sure that all those pieces are properly addressed.

Just quick follow-up question on that.

How quickly do we usually see vaccines reimbursed?

I know it takes a little longer and not only in that I guess it would be someone else's problem, but in the US how quickly do we really see that happen?

It actually happens quite quickly.

There is a sequencing of events that has to happen; one is FDA approval, two is a presentation to ACIP for ACIP to make their recommendation.

With ACIP recommendation, you then get recognition by the payer community.

And that happens - I think there's a couple of comps in there.

Look at Prevnar ACIP recommendation and the 3 to 6 months or so that it took to be properly covered by Medicare prior to that first season.

So, with the right groundwork being done, all that can happen pretty quickly.

Joel Beatty from Citi.

The first is on the production capabilities for the worldwide launch.

Just talk about the worldwide partnership.

If you look to flu vaccines, there is hundreds of millions distributed worldwide each year.

So, if that could be a guide for RSV, there is a very large market.

So, how easy would it be to ramp to the production levels necessary for launching worldwide?

Well, we've obviously given that lot of thought.

We have a capacity right now to take care of product in the launch year and the first and second year post-launch.

Our expectation, just I said before the end of this year, I mean, we've been doing a lot of work on designing a manufacturing facility, and then take the capacity post-2020, say, through the next four or five years.

And we've got plans for that.

We will probably flip the switch on those plans in the fourth quarter of this year once we know how our partner is and the extent to which our partner wants to manufacture product for the non-US market.

And then follow-up question; last year, the results for the Phase 2 RSV trial in older adults who were reported in early August along with the second quarter earnings call.

Given that these trials are seasonal, should we view the early August timeframe as a most likely time for results from these two ongoing trials in other adults or are their other factors?

I think that our guidance has been third quarter and we'll stick with that right now.

Heather Behanna of Wedbush.

Just a couple of quick ones.

One is about the combo data in the first half of next year.

I was just wondering what are the gating factors?

Is it getting RSV data, are you also dealing with manufacturing hurdles, or is there something else?

So, I don't think there are any gating items, other than the fact that having to get into the clinical trial, it's more complicated because we've got multiple strains of respiratory viruses going into same person.

But the first trial will also look at flu alone, RSV alone, the combination and with and without our Matrix adjuvant.

So, it's going to be a great trial and we'll be able to compare all those arms and we'll have a path forward.

There are no true gating items; we don't expect to have a commercially formulated, multi-strain vaccine for the Phase 1 trial.

So probably administered mixed at bedside.

But we're going to get some great data of this trail; we are really excited about it.

And then just a quick question, again, on just your discussions with EU regulators.

And it sounds like you've made really good progress there.

Is that one of those things that you will wait to partner before pursuing actually filing ex-US?

I don't think we'll have to wait.

So, I think we'll have a (inaudible) before we file ex-US.

Kevin DeGeeter of Ladenburg.

Number of them have been answered, but just sort of on a high level kind of coming back to the manufacturing question.

When you kind of talk to prospective partners, first of all, longer term, do you view manufacturing as sort of a strategic capability of Novavax that you want to retain that or from your view most of your partners candidly have maybe deeper resources and broader expertise to facilitate a global supply chain?

So, yes to both of those questions.

I've always thought that manufacturing capability in a vaccine company like ours is a strategic capability.

I think that we're where we are only because we took on the obligation of manufacturing and didn't go to CROs and built our own GMP facilities.

And we would be at least a year or two away from where we are right now in Phase 3s and getting to commercialize if we hadn't done that ourselves.

So, we'll build the capacity that's required for the large US market.

And with the partner, it's two things; there are some advantages, there are some potential theoretical advantages to having two different facilities and having the partner have one or we could run it.

That's really an economic negotiation as to how that's handled.

So, all of our partners, all of our potential partners, you're right, have the potential capability to either build or use some of their interesting capacity.

So we'll see.

And then maybe on a slightly different note but kind of staying on the business development theme tonight.

As we think longer term, assuming a positive outcome with elderly and the RSV and build out of a commercial organization, I think there would some expectation of commercial portfolio to follow, i.e., some sort of M&A business development to bring kind of complementary products to leverage that channel.

But, if you think of an RSV vaccine kind of - what use of the right profile for a complementary commercial product?

Is it hospital-based product, is it another vaccine?

I mean, where do you see it basically leverage in the commercial model, assuming a successful path forward with RSV in the elderly?

The easiest answer to that of course is the flu vaccine is the straightforward complementary vaccine.

And so, that's why we're building a flu vaccine, but it's you build or require one of the two, but there it's same time year everybody uses it, it's the same subject population.

So, that's an obvious one.

Question is whether we use the technology to go into vaccines that are either therapeutic in the same area or to produce complementary products that would be used in therapeutic for RSV or influenza.

There is a lot of opportunities; we're looking at them all the time.

And it's, I guess, I'll just stick with the answer that the easiest complementary programs is the flu program.

George Zavoico of Jones Trading.

First question, I have is to do with the Resolve.

You're enrolling patients that over 60 years of age.

Are you - have you predefined subsets divided by age in case, for example, to the 60 to 65 year olds who are not quite as sensitive to the infection than, say, someone who is over 65?

Yes, we pre-specified enrollment of approximately 25% of subjects over the age of 75, and I think we had 24.3% or so.

So, we've met that objective.

The reason for that is that that population has more sever outcome to RSV; we felt it would be important to support our filings in this pivotal trial with that pre-specified stratification.

So, it's possible that you might be able to get to the end point, which is the whole ITT population just on the 25%, perhaps, or is that a stretch?

I don't think the rate is so different, and possibly the rate to launch -- we'll see.

We expect the whole dataset contribute to the endpoint.

John, other question for you; in terms of the severity of the RSV symptoms, the physician who really see that are the ER docs, because they're the ones treat them, and not so much the primary care.

But it's the primary care doctors who are going to be, I guess, talking about the vaccine.

So in terms of educating one group versus the other or both groups, how do you approach that?

And sort of a correlated to that and a follow-up to part question about the ACIP, is it possible you could get the ACIP recommendation at about the same time you get the approval assuming, of course, the trials are positive?

Yes.

So, let me answer that last question first.

So, again, with all the foundation laying work that we're doing with the ACIP that we would expect to see it brought to the committee within the next meeting after FDA approval.

And so, that could happen - there is February, June, October meetings, and so however that falls into the sequencing, which is kind of yet to be fully detailed out, we would see us going to the ACIP meeting just after approval.

As far as education for the healthcare provider community, it's across the board.

I think we want to focus on is not where there is treatment but where there is an opportunity to vaccinate.

And so, there is multiple points for vaccination for the older adult community; it could be the physician office, but it could be a number of various specialties.

What we want to do is take advantage of wherever the point of healthcare is at the point that there is an opportunity to vaccinate.

Additionally, as Stan mentioned before from a complementary product standpoint, the only other annual seasonal vaccine is influenza.

And therefore at the time that flu is being administered, there is no reason why RSV wouldn't be administered as well.

So, we have a great opportunity for a pull-through on RSV vaccine simply because of market penetration in flu.

And about speaking of the flu vaccine, it's being a segue, you've resolved the manufacturing issues that you had with the quadrivalent vaccine quite a while ago.

And in fact, at one point the seasonal vaccine was well ahead of the RSV program.

And through last couple of earnings calls you've said that your discussions with BARDA on what to do next.

Could you clarify why there has been delay, and what's basically holding it back, moving forward on that?

Is it perhaps that you want to do it in the combo setting altogether; a seasonal and a seasonal plus combo in one trial, maybe to help keep cost down?

I don't know - not keep cost down.

So what we're trying to do, and we're doing this at the encouragement of BARDA, is to make the most effective commercial vaccine.

And we're doing that with some changes to what we had been doing before.

And so, those changes take time to roll through, get your animal data and discuss that with BARDA and then plan for the next trail, as I mentioned.

We'll give you a whole lot more data on that by - I think I've said for the last quarter or two that in the second quarter of this year we would provide guidance on the path of the clinical development path forward for our flu and combo program.

And so, we'll do that.

And now we have told you today that we'll do that at the end of this month.

And so give me that time until we can do that so we can talk about data and we can talk about clinical development timeline.

But we're very excited about is the new flu program in combination with both the potential standalone product with the combination with RSV.

And we're working - we're tracking to BARDA.

BARDA changes to programs require discussions.

So, we'll see where discussion is with that.

But the ideal program would include this new combination strategy for commercial vaccine that would apply to all the changes that we make, would apply to the pandemic program.

And the goal would be to take both of those programs in with BARDA partnership in hand.

And so, we'll talk about that at the end of this month.

And to that point with BARDA, when does the funding period close?

Do you need to get another extension?

Well, we will at some point; it ends in September of this year.

So, the contract - but likely have in the past, we're hopeful that we'll have an extension of that.

And then a question about zika, you mentioned you're in discussions with various government non-government agencies.

There has been a lot of news lately about some of those kinds of arrangements or agreements coming into play.

With Ebola and other before that you kind of advanced those on your own, as I recall.

Is that like a bit of a change of strategy now to wait until we get some support from - some external support?

It's just timing, George.

I can spend a lot of time talking about what governments should fund on emerging viruses and how companies should take those, and I am not going to do that on this call because we've done with it pandemic influenza, with a straight pandemic influenza, we did with MERS and we did it with Ebola.

And now we're moving forward with zika in the early stages, and of course, the early stages are the least expensive stages.

So, we're willing to demonstrate yet once again that our technology can make a potential vaccine.

But we're really interested in seeing government, non-government organization support zika program.

The only difference of zika is that there might be a standalone market that doesn't depend upon the stockpile and the government, unlike Ebola, but we're working that very carefully.

So, the first thing is to get some data.

Vernon Bernardino of FBR & Co.

I just wanted to follow along the lines of questions asked by Ted and George regarding ACIP.

So, once you have, let's say, a recommendation for the RSV F Vaccine, does it still require education of the treating physicians, or again, if you could describe a little more detail on how, let's say, a launch and detailing physicians would be or the market would be in general of the RSV vaccine?

So that educational activity has begun today.

The launch of our disease state awareness campaign is a critical element to that.

RSV has somewhat been a little bit lost in the midst of respiratory diseases for older adults.

And so, we are trying to make sure that the healthcare provider community understands that the other respiratory disease of significant consequences is RSV.

And that will continue up and until we have FDA approval and then ACIP recommendation.

The recommendation takes you a long way as far as educating the healthcare provider community, but it doesn't end there; there is a significant amount of work that needs to be done with our medical affairs team and entire account management and education team as well as the sales team.

And it's a really kind of coordinated hybrid effort, given that there's not one particular physician specialty that will be the focus of vaccination in older adults.

You have to educate all of the healthcare providers to the benefit of the RSV vaccine; that includes pharmacist that includes general practitioners, [dermatologists] and across the board.

And so it's a full blown educational disease-state awareness direct to the consumer campaign.

A good example of that is again you go back Prevnar.

Prevnar has a good case study from the past year in that they've dramatically impacted the disease awareness for pneumococcal pneumonia when that has been around for quite a long.

It's been supported by a vaccine, Merck's product PNEUMOVAX 23, and yet Pfizer and Prevnar had a significant impact on the launch of their program and in the awareness associated with getting vaccinated.

And along those lines, then.

I assume that maternal immunization and the immunization of older adults would be two different markets.

Now, with ACIP recommendation encompass both, and if they don't, what would be the educational effort be needed with the maternal immunization?

Yes, you are right.

There are two different markets and we are going after two different kind of communities.

You also keep in mind that since it's two products, there will be two separate ACIP recommendations.

But more importantly, the vaccination site would differ from older adults, almost exclusively in the OBGYN's office.

So, you are talking about vaccinating somewhere around the third trimester, and this is a group that is beginning to become very aware of adult immunization programs; they are now vaccinating for influenza and for tetanus.

The vaccine coverage rates for those in the maternal community has accelerated quite a bit over the last few years and medical associations likes ACOG have particularly embraced adult vaccinations and maternal vaccinations.

And so, we would expect to do an educational campaign there as well.

But two separate ACIP recommendations and two separate kind of sales and marketing initiatives to go after those very interesting markets.

Thank you.

I'm showing no further questions at this time.

I'd like to hand the call back over to management for any closing remarks.

Thanks everybody.

It was a bit of a long call, but we have a lot of important things to talk about.

So look forward in the next quarterly meeting that will be much closer to the data that's going on a variety of those fronts.

So, talk to you then.

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

That does conclude today's program.

You may all disconnect.

Have a great day everyone.