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Executives

Alan Engbring - Executive Director of Investor Relations

Vijay Samant - President and CEO

Tony Ramos - Chief Accounting Officer

Analysts

Ritu Baral - Canaccord Capital

Lee Kalowski - Credit Suisse

Howard Liang - Leerink Swann

Jonathan Eckard - Citi

Stephen Willey - Stifel Nicolaus

Katherine Xu - William Blair & Company

Vical Incorporated (VICL) Q2 2013 Results - Earnings Call Transcript August 1, 2013 12:00 PM ET

Operator

Good day and welcome ladies and gentlemen to the Vical Incorporated financial results conference call. At this time I would like to inform you that this conference is being recorded and that all participants are fin a listen-only mode. At the request of the company we will open the conference up for questions and answer from the invited participants after the presentation.

I will now turn the conference over to Mr. Alan Engbring, Executive Director of Investor Relations. Please go ahead sir.

Alan Engbring

Hello, everyone welcome to our first quarter 2013 financial results conference call. Participating on the call today are Vical's President and Chief Executive Officer, Mr. Vijay Samant; and Vical's Chief Accounting Officer, Ms. Tony Ramos.

I will begin with a brief notice concerning projections and forecasts. This call includes forward-looking statements, including financial expectations and projections of progress in our independent and collaborative research and clinical development programs that are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks set forth in Vical's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, as well as the specific risks and uncertainties noted in Vical's news release on second quarter 2013 financial results.

These forward-looking statements represent the company's judgment as of today. The company disclaims however, any intent or obligation to update these forward-looking statements.

Now, I would like to introduce Vical's President and Chief Executive Officer, Mr. Vijay Samant.

Vijay Samant

Thank you, Alan and thank you to our participants for joining the call this morning. Today we'll discuss the status and expectations for our key development programs particularly a timing update on Allovectin and a detailed look at the recently started Phase 3 program for TransVax which now is renamed as ASP0113.

We'll begin the call with review of financial results by our Chief Accounting Officer, Tony Ramos. Tony?

Tony Ramos

Thank you Vijay. We reported financial results this morning the second quarter and first six months of 2013. Revenues were $3 million for the first six months of 2013, compared with $13 million for the first six months of 2012. The decrease in revenues was primarily a result of the $10 million milestone payment from Astellas last year for progress in the CMV vaccine program previously known as TransVax and now called the ASP0113.

Research and development expenses were $7.6 million in the first half of 2013 compared with $10.2 million in the first half of 2012. The decrease in R&D spending primarily reflects a sub-license payment we made in the first half of 2012 related to the Astellas milestone payment.

Manufacturing and production expenses were $7.6 million in the first half of 2013 compared with $5.4 million in the first half of 2012. The increase in manufacturing and production expenses was driven primarily by increased activity related to the Astellas agreement.

General and administrative expenses were $7 million in the first half of 2013 compared with $5.5 million in the first half of 2012. The net loss was $19.2 million for the first half of 2013 compared with $7.6 million for the first half of 2012, with the Astellas milestone payment last year accounted for most of that difference.

Our first half 2013 net use of cash was approximately $17 million, which is just below our first half forecast range of $18 million to $20 million. We ended the first half with cash and investment of $70 million. We will provide guidance for the second half of 2013 net cash used after we analyze the financial implications of results from the Allovectin Phase 3 trial.

With that I will now turn the call back to Vijay.

Vijay Samant

Thank you, Tony. I'll begin today with a quick status updates on our Allovectin program, we've been driving the development of this investigation immunotherapy over a long period of time. And everyone at Vical is personally and professionally invested in the outcome, if results are positive Allovectin has the potential to become a first in class treatment alternative intended for outpatient administration with local injections designed to induce a systemic immune effect, we all hope for the best.

Our goal is to release a topline results during the month of August, immediately after this conference call, we'll enter into a self imposed quite period and we'll not be interacting substantially with the investment community until the topline results are released. As a result, we've cancelled our scheduled public presentations through the end of August, we appreciate your cooperation and understanding during this period and we look forward to the announcement of Allovectin results.

I'll now move to our other key development programs. TransVax in collaboration with our partner Astellas we announced in June the initiation of a pivotal Phase 3 trial in hematopoietic cell transplant recipients to support registration for our CMV vaccine previously called TransVax.

Just a quick note on the same, Astellas has asked us to use their development name ASP0113 moving forward, it's more cumbersome than TransVax, but that's the name which we're going to use until it gets a formal name.

As a reminder, in most HCT recipients of leukemia, lymphoma patients as part of their treatment for their [underlying] cancers, their immune systems are essentially eliminated and the transplant of stem cells from healthy donors allows them to start rebuilding new immune systems.

During the recovery period, before the immune systems are fully functional these patients are at high risk for CMV and other opportunistic infections. Just like general population more than half of these patients have preexisting CMV infections which is normally kept under control by a healthy immune system.

We are only enrolling patients who are CMV-seropositive as their hiatus for CMV reactivation during their post transplant recovery period, before their new immune systems become fully functional.

CMV can lead to a variety of serious complications including pneumonia, organ failure and death, in short these are very sick patients in CMV seriously threatens their chance of success with transplant procedures. CMV reactivation in this patient population typically peaks within the first 100 days from after the transplant procedure, so it's important to mound a sufficient immune response early in the recovery period and to sustain it until new immune system is fully functional.

Our vaccine is intended to control CMV during the speed of risk and thereby reduce or eliminate the need for toxic and expensive antiviral drug therapies currently used. By one year post transplant, our planned follow-up period in this Phase 3 trial, the new immune system typically is able to control CMV on its own.

When we started exploring primary endpoints for the Phase 3 trial, we focused initially on CMV Viremia or use of antiviral therapy. While this will be good indication of patient benefit they are considered surrogate endpoints and based on the feedback on regulatory agencies in U.S., Europe and Japan, we established that using these surrogate endpoints will only support an accelerated approval and would require a commitment to conduct a post approval study.

We worked with Astellas to design the single Phase 3 trial with the primary endpoint and with support full approval in all key markets with no post approvals steady requirements. Full approval requires a clinically meaningful endpoint. One clinically meaningful endpoint that is being used by others in the past CMV studies is CMV disease.

Before our antiviral drugs were introduced in 1990s to control CMV in seropositive recipients. CMV disease was the leading infections disease cause of death among patient population. However since the introduction of antiviral drugs the incidence of CMV among seropositive patients has dropped from 20% to 30% range to less than 5%.

So while CMV disease is still is clinically meaningful, there's no longer a practical endpoint, because it would require a huge trial to achieve statistical significance. Other clinically meaningful endpoints include acute graft versus host disease, chronic graft versus host disease and infections other than CMV. There are frequent complications among HCT patients and all are more common in CMV seropositive patients.

In other words, CMV reactivation is a contributing factor not the only factor driving these complications. Like CMV disease these potential endpoints individually are not practical as each would require a very large trial. Off note however that each of these complications also associate within increased mortality among HCT recipients.

Individually, the differences for each pathway maybe small, but collectively the impact of CMV serostatus and mortality is quite pronounced. Published data have typically shown 20% to 30% survival disadvantage for CMV seropositive HCT recipients.

So CMV reactivation is linked to overall mortality and control of CMV reactivation with a successful vaccination strategy logically would provide a survival benefit. Based on this logic, we have designed a Phase 3 trial with a primary end point of overall mortality at one year after transplant.

The one-to-one randomized, double-blind placebo controlled trial, we enrolled 500 HCT patients who are CMV seropositive and will be stratified by donor recipient relatedness in this and donor CMV serostatus, to reduce the risk of conducting a large study with an untested primary endpoint, the Phase 3 trial uses and adaptive design with hundred subjects in the part and 400 subjects in the second part.

The main objective in the first part is to select the primary endpoint for the second part. We'll compare the overall mortality one year after transplant between the vaccines in placebo groups in the first 100 subjects. We will then calculate whether the statistical trend in the first part would reach statistical significance with additional 400 subjects in the second part, if so the primary endpoint will be the overall one year mortality. If not the primary endpoint will be a composite endpoint combining one year mortality plus other relevant variables.

There will be no break in enrolment as we transition from part one to part two. This prevents the disruption of stopping and restarting the trial or conducting two separate studies. The endpoint for the second part must be finalized before enrolment is complete. Using the primary endpoint established in the first part, the second part will evaluate efficacy in 400 subjects.

Astellas expects to complete enrolment for both parts of the trial by the end of 2015 or sooner which will allow trial completion by the end of 2016. Separately a planned Phase 2 trial with the ASP0113 for solid organ transplant recipient is expected to begin later this year. We will provide more details of the Phase 2 SOT trial design and the timeline when it begins.

In summary, we are very pleased to be working with Astellas who have proven to be an excellent partner with the CMV vaccine program. We are excited to have this lead trial that's underway and we look forward to completing the process as efficiently and as quickly as possible.

I'll wrap up with some brief comments on our therapeutic vaccine for Herpes Simplex 2 which is designed to help control outbreaks and shedding in people already infected with HSV 2, more than 500 million people, about one out of every five or six in the 15 to 49 age groups are living with chronic HSV-2 infections worldwide. So this represents a significant unmet medical need and a large commercial opportunity most of these patients either do not have access to or do not effectively use antiviral drug, which are the only treatment available at this point. We are advancing as scheduled to initiating a Phase 1/2 trial by the end of 2013 and we'll provide periodic updates on our progress as we move forward.

In our release this morning, we confirmed our guidance for the remainder of the year. We're excited about the Allovectin program. We expect to share the topline results from both endpoints in the month of August. Astellas expects to initiate a Phase 2 trial of ASP0113 and so solid organ transplant recipients later this year and we'll provide details on the trial at that time. We plan to initiate a Phase 1/2 trial of our vaccine for HSV 2 by the end of 2013.

That concludes our prepared comments for today. Operator, we're now ready to open the call for our invited participants. Thank you.

Question-and-Answer Session

Operator

Thank you. Mr. Samant. The question-and-answer session will begin at this time. (Operator Instructions) Our first question today will come from Ritu Baral of Canaccord Capital.

Ritu Baral - Canaccord Capital

On the Allovectin trial, has anything, as you finished with sweep, has anything changed in your assumption for placebo survival and have you enter statistics, what is your current assumption?

Vijay Samant

As we said, nothing has changed in our assumptions because sweep is a primarily involved in collection of data. So it should not have any impact on our assumptions and the control endpoint. As we said, the original assumptions which are in the trial design, 11 months of the control arm, and 18 months were treatment arm.

We've said periodically that we believe that knowing what's occurred in the field that number could be anywhere in the 12 to 14 months range and we feel very comfortable that if that's been control arm based on our prior Phase 2 data, the trial results will play out positively, but it all will be unblinded very shortly. So you will be able to see it all when that occurs. There are no changes in assumptions at this stage.

Ritu Baral - Canaccord Capital

Got it and for your CMV trial, what are the powering assumptions going, what are the target powering assumptions for the trial, what are you essentially going to adapt enrollment to reach?

Vijay Samant

Alan?

Alan Engbring

Astellas and Vical have agreed on certain things we will and we will now disclose it and the powering assumptions, we are not something that we've agreed to disclose at this time. I can pursue that separately with them and see if we can add that before the next conference.

Anthony Ramos

I mean there are a lot of competitive trails going on, ours is a very unique endpoints as you know, there are number of CMV antiviral studies that are going on and those are if you go and look at the timeframe are only based on accelerated approval. So this is one of the few trials, which is based on pivotal approval including without naming the company recently [fails] the CMV antiviral studies they were all over accelerated approvals.

So this is a very unique endpoint and in the adaptive trial design, which I kind of give you a little bit that of background on, it's been very carefully thought out with an expert group Astellas and Vical used from the outside that help us think it through very carefully. So there are some proprietary talk processes that have gone into it, okay.

Ritu Baral - Canaccord Capital

And last question before I hop back in the queue, have you had any recent interactions with FDA around the FDA that you still have in place for other vaccines?

Vijay Samant

It's not our practice to normally discuss the interactions with the FDA, all I can tell you is that interactions with CBER always had been very productive. We deal with that branch of the agency known as CBER and we continue to talk with them on a variety of fronts, okay, including manufacturing issues, so this is an ongoing dialogue and we have a good relationships with agency.

Operator

Next up from Credit Suisse is Lee Kalowski.

Lee Kalowski - Credit Suisse

Vijay, the last few quarterly conference calls, you have given us the analogy of driving across the country and I think when we last left off we were in Central New Jersey. So I guess as we are now in midtown Manhattan for parking spot?

Vijay Samant

We have just entered and unfortunately George Washington bridge was close so we had to come through Holland Tunnel and only one main was open, it took us a little time but we are now in the city and heading southern section of Manhattan and we are right down the Westside highway, okay.

Lee Kalowski - Credit Suisse

All right, so we're getting close and so I guess given that you had said Q3 and now you are able to narrow it down to August, can you just sort of give us an update for what you are seeing and where we are precisely that gave you the ability to sort of narrow that down a little bit?

Vijay Samant

The issue simply is that when you start predicting six months, you start predicting quarters, okay and as you get start getting closer, you get better granularity. The last thing you want to do is, after I having made so many changes in terms of the timing of it and to be slow, precise and say that I am going to get this done in August six months ago and then blow it by one month and do it in September. So our goal was to try to get it done as early as we could in this quarter and so now we have much better granularity to predict that August is a doable day.

Lee Kalowski - Credit Suisse

Okay. Does that mean all of the death events required have been reached?

Vijay Samant

You're going to find out when we update all the data in terms of what the death events are, what all the assumptions are. I think so just look forward to it. I think at this point and in terms of whether we are going through granularity what exactly we are accomplishing in the company day-by-day, I don't want to take time discussing that.

Lee Kalowski - Credit Suisse

Okay, that's fine. And given that you'll be going into quite period, I guess just one last chance to sort of get your thoughts if we think about a metrics of overall survival and response rate, I mean obviously I guess there are four outcomes, two of which are very obvious. Sort of how you think about the two intermediate outcomes or maybe one endpoint hits and the other doesn't?

Vijay Samant

Well, all depends I know what you're saying, if we meet one and don't meet the other, we don't meet both. I think first of all, the primary, the most important endpoint of the result of what occurred in the landscape of survival now. Okay, we have to beat survival; we have to show statistical significant survival. There is no ifs or but about that and the rest of them depends on where you are with the trend, where you are with the number. So for me to speculate what the number is going to be, it does a lot of interdependency on what one number is versus the other number okay. So you are right in terms of your analytical thinking, in terms of the two sections of the metrics. But within that there are a lot of other possibilities. So I think let the data speak for itself and when the data comes out, we'll be able to comment on it. Obviously, we'll have good experts working with us in terms of helping us interpret that data.

Lee Kalowski - Credit Suisse

Okay, that's fine. And have you said what P value you need to hit to meet the statistical significance?

Vijay Samant

No, we have not because you just pointed out there are two end points, we haven't said that yet.

Lee Kalowski - Credit Suisse

And I guess last question would be, sort of as you think about you know the management structure and you know obviously you are out of the CFO right now, are you waiting for the data to sort of make that determination and figure out what changes might be most appropriate based on how the data looks?

Vijay Samant

Absolutely, I think you know with the successful outcome of the study, the organization will have to grow, there will be strength in the organization on a variety of fronts particularly on the commercial aspect of the organization and we said that (inaudible) study done a superb job you know so far in the absence of our CFO.

Operator

Our next question is from Howard Liang with Leerink Swann.

Howard Liang - Leerink Swann

So given that you're able to give protection of August data, so I would assume that the required number of the events have been reached and can you talk whether you already have the overall response rate or any?

Vijay Samant

No, I think as I told in the previous calls you know the adjudication and the response rate data has been separate database. The adjudication process was in the process of getting complete. We were being a sleep and both those processes are converging okay. What I don't want to do is go and tell you exact timing of what events are occurring when, because we're almost four weeks before the end of August, so this is going to occur very shortly and you will see all these numbers okay without speculating at this point in time.

Howard Liang - Leerink Swann

Okay. And if assuming that it was positive, what other indications would you consider developing Allovectin?

Vijay Samant

I think it's an excellent question Howard as we have said that this is a -- if this therapy is successful and indeed the results meet what we expect them to be and it shows the kind of safety profile that we have seen in Phase 2, this is a genetic vaccine for all kinds of solid tumors. And as you know, we've said previously, we've done earlier Phase 1/2 study in head and neck cancer, where we had some early indications that it has some positive effects in head and neck cancer arena. So that's a logical choice. Our partners in Japan aren't just actually licensed Allovectin primarily for use in head and neck cancer and this is also an opportunity for a new adjuvant setting in melanoma.

There is no therapy available for new adjuvant setting for early stage II, III melanoma that you get only resections. If this is successful, obviously we will have to do a small study to demonstrate the medical, but you could give a couple of injections for either resections and you get some immune activity going through this prevention of the current later on stage. You know, most people get stage I, II melanomas taken off and 15, 20 years later, the melanoma shows up and this could be a powerful new adjuvant assuming it works okay. So big opportunity if it's successful. And as I said previously, we have orphan drug status, we have fast track status and we have a lot of knowhow in terms of how we make it.

Howard Liang - Leerink Swann

Have you had any discussions or even have any had any work done with the other players in chemotherapy either in injectibles or PD-1?

Vijay Samant

I think excellent question. The question is whether we are contemplating any work to do the on the new drugs, which are already in the marketed drugs which may potentially cover the market. Let me tell you one thing is that we are already demonstrated in animal models at least there is a synergy between us and CTLA MAM, that CTLA MAM and Allovectin combination works better than CTLA MAM. We intend to do similar studies using the PD-1 analog, which are available. At this point in time until our data is fully blinded and we are in the right track to get this drug approved, it's high risk to put this in combination study to avoid any safety or adverse event. But assuming the data is positive we have a lot of combination studies which we have designed for human clinical studies and once the data is out, we will have all the right partners lined up indeed to begin those studies in the near future.

Howard Liang - Leerink Swann

Okay. If I could just last question on the ASP0113, (inaudible) if I heard correctly was one year mortality after transplant due to?

Vijay Samant

Not due to CMV, mortality period, not to CMV disease.

Howard Liang - Leerink Swann

Okay. What is it typical rate of one year mortality?

Vijay Samant

If you look at the groups as I said in my script is about 20% to 30% federal mortality of CMV positive versus CMV negative patients, right.

Anthony Ramos

Howard, in our Phase 2 study for example we had in the placebo group 33% mortality in one year.

Operator

Next we will hear from Jonathan Eckard, Citi.

Jonathan Eckard - Citi

My first question is I heard the comment was we have to have survival, not just survival, could you talk possibly about what metrics of survival are feasible for like what the -- you believe the FDA could take or what the interested in or certainly are substantial viable two year analysis of the program and then I have a follow-up question about some of pipeline?

Vijay Samant

I can't talk about what the FDA is specifically going to accept and not accept. Generally it's all going to be depending upon you know how the ( inaudible) looks what the median survival is and obviously we are going to show statistical significance. You are not going to go to the agency without any statistical significance that I can tell you without not being a part of the agency. So what level or what strength in the statistical significances required is subject to open discussion, but it is going to be the overall capital macro what kind of separation you get in the curve, the agency obviously will have a lot of questions in terms of what post Allovectin and post placebo treatment these patients got and we are prepared to answer those questions at the appropriate time. We will also be looking at what the one year, two years, three years survival rates are compared in both groups versus what has been seen currently in some of the approved drugs because it's now the real time data beyond the clinical trial on those drugs. So variety of factors will go into it, okay.

Jonathan Eckard - Citi

So it's really the latter part the one year, two year, three year and you are saying that there are samples of drugs, were the sample of drugs are going to approve on those metrics by the same division?

Vijay Samant

They are because those one year, two year, three year eventually get calculated into the hazard wish overall which is the overall necessity in the capital macro and therefore as you know was approved basically on data which was on six months okay, I mean then there was crossover allowed in the study, okay. So whatever data came out those crossovers meaningless, because then crossover got everybody got (inaudible). So very limited data on which was approved and very early need on that study.

So the agency has done variety of things, okay. So it's everything is on a case by case basis, you have to look out at the overall drug, how it's administered, what the safety profile is, what the efficacy profile is and all those put together, where does it fit in the value proposition and is it a therapy which is unconventional compared to what's available, are there a synergies with the therapy or it is in theoretical, all those will be taken into account as people think about it, but I can't speak for the agency.

Jonathan Eckard - Citi

Okay. And then regarding the pipeline, it's unfortunately the [aim] trials were negative, what are you foresee as first couple of events that could really highlight the remaining value of the pipeline assets that are in pipeline?

Vijay Samant

I think the ASP0113 study, it's a 500 patient study we will be actively engaged in it. The entire money for the study has been spent by Astellas, we'll be providing all the material towards it, it'll be followed a solid organ transplant study that will be done which will happen in the second quarter. We will also have our HSV-2 program which is going to be starting very shortly. Subsequently, we also have [Cimvectin] which is in some way we're sitting on the R&D and we're rating for some guidance in the agency and target end points and this is the study that we can immediately start our proof of concept study in 200 patients.

And then we have some licensed programs in AV and others in dengue and malaria. And I don't forget I keep on reminding that we're doing a lot of work on an adjuvant Vaxfectin with a variety of people. And there are some other things we are thinking of which we'll have to discuss publicly, if eventuality of what you describe happens but we feel good about how the Allovectin study has gone so far so let's be positive.

Operator

Next from Stifel is Stephen Willey.

Stephen Willey - Stifel Nicolaus

So Vijay just to clarify then we will be getting the one, two and three year survival rates in addition to the median when you guys report out progress in August?

Vijay Samant

We have to be careful what exact data we're going to release because we obviously if the data is good we want to make sure we publish the data within the bounds of what we can publish a good a scientific journal so you know if the data is really good we are going to make sure that you'll get sufficient sniff of the data that you get excited but not bearing the kimono without presenting in the conference by getting it published simultaneously.

So we're a little bit under the gun right now okay, unfortunately because if this was an ASCO kind of timing we could have managed it well. So I don't want to kind of commit to at this point what we are going to present but it'll be in matter of weeks or months we'll be publishing the whole data okay. Right now we'll give you the top line data which we assuming the data is good, we'll get you excited.

Stephen Willey - Stifel Nicolaus

And I guess I asked the question because I know some of the other immunotherapy products we've seen all of them have kind of generated non-interesting/enthusiastic medians but have generated some fairly provocative tail data. So I guess that's just why I'm asking the question because I think it kind of is important to our ability to interpret what the [OS] data means.

Vijay Samant

It is because the one year, two year, three that you folks talk about you need to understand that, if I'm going to give you an overall feed value on the curve, that's an integration of the entire Kaplan-Meier curve that takes into account the tail. It's not the median survival numbers which are important, but the hazard ratio that you get works across the entire curve. If it's captures, the one or two year, three year survival data. So I think the hazard ratio is going to be really key okay.

Stephen Willey - Stifel Nicolaus

Okay. And then as it pertains to the Astellas program, I think there was question previously with respect to what you are going to be able to disclose or not disclose? Will you be able to at least characterize the pace of enrollment going forward?

Vijay Samant

I think so. It's the (inaudible) as most companies and most savvy companies don't give you exactly patient by patient, in terms of where they are, but I am sure Astellas will provide guidance on a quarterly basis for the progress they're making at least in terms of where the endpoint is. They are savvy people. They know the transplant market. They are the largest selling drug in the transplant [selling program] and they know all the transplant centers. Obviously, there is competition out there but I think they are going to be recruiting across several centers in U.S., Europe and Japan. So they should be able to recruit pretty rapidly.

Operator

Next we will hear from Katherine Xu, William Blair.

Katherine Xu - William Blair & Company

Couple questions, maybe, Vijay. For the CMV study, it looks like CMV infection is correlated with overall survival. Just curious whether is it causal as well and also what is the FDA's attitude on a kind of moving endpoint?

Vijay Samant

This is all [deemed]. One of the reasons it has taken us so long to get to this trial going is we had some experts in adaptive trial design from some top notch statisticians that Astellas had involved, there has been back and forth discussion in the agency, so this is not something that we've proposed okay, this is fairly well discussed with the agency, the agency understands it, the adaptive trial design and new concepts that companies are using. So, no, this is not something that we brought them to the FDA that okay, this is it and we are moving forward with the trail. The agency always gives as you know if results are right to you permission to stop the trial because they don't always exercise, but they can tell you that but we had, we along with Astellas had extensive discussions with both European agencies, Japanese agencies and the FDA.

So the answer is yes, they are very well [related] to what we are doing here, okay. Obviously, the one important point that I made in the script that we have to decide on the endpoints for the remaining 400 patients before the enrolment of the 400 patients is complete, that's important okay.

Katherine Xu - William Blair & Company

Is it because OS is the powerful component of the endpoint? So it could be OS, it could be a composite OS like a couple of other things, so those couple of things that quite easily terminates, is it because OS is such powerful endpoint, therefore, such plus a couple of things, just kind of (inaudible).

Vijay Samant

The first 100 patients will tell you. You need to look at our Phase 2 study, we did a small study in about 80 patients, okay. And you take a look with start 80 patients study is not powered to store statistical significance, but you look at the trends in the study you can predict that we have 200, 300 patients who have reached survival difference between both the groups, okay. So in 100 patients in the study, we should have sufficient power to predict that, you don't have to reach the statistical significance as 100 patients, all you need to see selectively in Vical that the trend is going and then we decide that we are going to stick to that endpoint, okay. But the agency has given us that, at that point we decide that we want to change from that endpoint and add something else to it, to make it a composite endpoint, they are okay with it.

Katherine Xu - William Blair & Company

Okay, and the CMV infection is correlated with other overall survival just curious, is evidenced saw…

Vijay Samant

You know offline I will give you and I will send you some papers, okay, that is been published on that subject matter, okay.

Katherine Xu - William Blair & Company

And on Allovectin, I guess the assets before that this is sort of the final stretch in a while long time and then during the most recent months while you were collecting data, studying data and going through adjudications, watching from the side and anything on the conduct of the study, any update or thoughts or it has been consistent as in being good and makes you, you will feel comfortable?

Vijay Samant

Yeah, I think so, we had as I said, I don't know when we said that we had an expert group kick tires couple of months ago in terms of the execution aspects of the study in a blinded fashion, you know the execution, you don't need to unblind the study to look at kick tires and you know people who have conducted large studies or who are not familiar, who are not clinical investigators and they thought that the conduct of the study is pretty solid, okay, obviously in terms of the way we have conducted the study, compared to some of the teams that we hear but however some companies when disclose the studies, we have gone through as I said previously you know the studies, not a study that's primarily enrolled in Eastern Europe or something like that.

We don't have one single center which is predominant in the studies in conducted in the rural sites of the United States, but select countries in Europe, Israel has been a big recruiting center for us, Brazil, we're not in Australia and I think everything that we have done seems on the right track. So I personally don't have any concerns, but until you unblind the data, we don't know what you're going to find out.

Operator

(Operator Instructions) And the next question we'll take a follow-up Ritu Baral.

Ritu Baral - Canaccord

Thanks for taking the follow up guys. Do you think, can you remind us again the status of CMV for you guys for Allovectin sorry?

Vijay Samant

The first of all, Allovectin just to give you a little bit back ground unlike, the people still get confused, it's not patient specific therapy, it's made by a very simple fermentation process and two purification steps. So it's well characterized biological. So you don't have to do bridge clinical studies anything between the Phase 3 process and the commercial process. We are on targets with the conformance runs both on the bulk side and the fairness side and everything so far.

The only difference in the Phase 3 and Phase 4 is in the Phase 3, the drug was actually built at Vical in Phase 4 we are using the contract manufacturer to build the drug okay. But the fermentation of the bulk drug is still produced here which is really the key issues in any of manufacturing, maybe in working with the agency on CMV issues for the last 12 years okay, including the stability stability update, raw materials spec, product characterization and I think our interaction that somebody asked do you have any interaction with the agency, we have interaction with the on CMC issues continuously for the last several years okay. And we've slowly and progressively taken care of all the issues that the agency wanted to take care of. So I think we feel very comfortable on the CMC aspect of it obviously and we have to get the right stability data and everything, but those are -- the devil is always in the details, but there are no sure stops that we see at this stage.

Ritu Baral - Canaccord

Will you be taking any sort of alpha kit for the interim in the CMV trial either from the FDA or Europe or Japan?

Vijay Samant

No, there is no, you see that's the beauty of the adaptive trial design. Those 100 patients are not calculated. The only number that's used in the calculation is 400 patients. Instead of conducting two trials this concept allows to do continuous one trial and take a quick sneak at the first 100 patients, but the data is going to be based on the 400 patients in terms of the statistical calculations. So there's no alpha to support the trial there.

Operator

We will now take a follow-up from (inaudible) Credit Suisse.

Unidentified Analyst

Just very quickly, I think the link record deadline for ASMO is August 7, if that isn't met do you have a sense for what the venue might be for the full data?

Vijay Samant

That's something we are debating right now. No, the answer is no, we don't have and that's why more than the venue I think the important part of as you know and you can talk to all the big guys is you got to get it published in the right journals or get to the right publicity, so it gets across you know rural oncologists you know who need to really find out and they find out more from the journals. Obviously ASMO and ASCO are cherry on the ice cream, whatever you want to call it, but we will find a venue, okay. I think [cheating] is getting the data right and then getting it published appropriately.

Operator

Ladies and gentlemen, that does conclude today's question-and-answer session. I would like to hand things back to Mr. Samant for any additional or closing remarks.

Gilles Labbé

Thank you all for participating. As a reminder, beginning immediately after this call, Alan and I and the company will enter in to a quite period, will not be interacting substantially with the investment community until we release the Allovectin topline results. Again, we appreciate your cooperation and confidence in this company. Thank you.

Operator

Ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation today.

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