Novavax's CEO Hosts Analyst and Investor Update Conference (Transcript)

| About: Novavax, Inc. (NVAX)

Novavax, Inc. (NASDAQ:NVAX)

Analyst and Investor Update Conference

September 24, 2013 9:00 am ET


Stanley C. Erck - Chief Executive Officer, President, Director and Member of Finance Committee

Gale E. Smith - Vice President of Vaccine Development

Louis Fries - Vice President of Clinical and Medical Affairs

Pedro Piedra

Gregory M. Glenn - Chief Medical Officer and Senior Vice President


George B. Zavoico - MLV & Co LLC, Research Division

William Tanner - Lazard Capital Markets LLC, Research Division

Gregory R. Wade - Wedbush Securities Inc., Research Division

Edward A. Tenthoff - Piper Jaffray Companies, Research Division


Good day, ladies and gentlemen, and welcome to the Novavax Analyst and Investor Update Call and Webcast. [Operator Instructions] As a reminder, today's conference is being recorded.

I'd now like to turn the conference over to your host, Mr. Stan Erck, President and CEO of Novavax. Please go ahead.

Stanley C. Erck

Thank you very much, and thank you, everybody, for joining the call. Looking forward to today. This is a new event for Novavax. This is the first time we've done an Investor Day or Investor Call, and so this is being obviously telecast and it's on the web, and you can get it through

So I'll briefly go with the agenda, which includes an overview from me. We'll move into a discussion of the technology by Gale Smith, he's our VP of Discovery or Vaccine Development. We'll move into a discussion of our influenza vaccine programs and the path forward there. At that point, we'll stop for a few minutes. We'll have a brief Q&A covering the technology and the influenza programs. And then we have the pleasure of welcoming Dr. Tony Pedro Piedra, who's a, really, key-opinion leader, he knowledge dione [ph] respiratory vaccine. He's a professor of Virology and Microbiology at Baylor College of Medicine, and he will review the RSV landscape for us. Then we will turn it over to Greg Glenn, who's our Senior VP and Chief Medical Officer, who will discuss the clinical development pathway forward and review the data that we've developed, the RSV program. And finally, I'll give a brief wrap-up and then we'll have a Q&A session after that.

So to start with, everybody on this call knows that we are a vaccine company. All of our vaccines are developed based upon a core technology, which is recombinant nanoparticle vaccine technology, which produces we think [ph] highly immunogenic vaccine candidates. They're in the form of virus-like particles and nanoparticles. We think they've shown that these particles can induce robust and functional immunity. And in addition, we have acquired a saponin-based adjuvant, which can enhance the immunity response and will be used, in particular, with our pandemic influenza program.

So we have -- we're a company with late-stage development programs. We've progressed from Phase I into Phase IIs. Our expectation is, is that we will be developing our first Phase III program by the end of next year. We've been building the company. Effectively, what we've done is we've built a new company around this [indiscernible] technology over the past 2 or 3 years. We have now 175 people. That has grown from about 2.5x from 3 years ago. We've been building an investor base that has grown along with the company. We have built and maintained now 3 GMP manufacturing facilities, 2 in Maryland and the third with our joint venture partner, Cadila, in India, which gives us a very strategic opportunity, such that our clinical programs going forward are not constrained by manufacturing, but we build only on the data that we derive in our Phase I and II trials. So we think we've got a management team and an employee team that can drive the products all the way through to commercialization with a strong balance sheet and, as I say, importantly, a strategic asset, which is manufacturing capacity.

Today, we've made 2 announcements which I think are strategically important for the company. The first is something that we've been signaling for some time, which is the continuation of the program with BARDA. We've been working to bring our manufacturing platform and production process out of the Phase I and II stage into a process that we consider locked and suitable for Phase III and commercialization. We've been working on our process for all of our programs to get to that gold. BARDA has been working closely with us, and has agreed that with the achievement of these milestones, that we will move into our -- what we hope to be our final Phase II clinical trial. We've commenced GMP manufacturing for our quadrivalent flu program. At the beginning of next year, we'll initiate that trial and take those data to the FDA with the end of Phase II meeting and anticipation starting a Phase III clinical trial by the end of next year.

And another significant part of that announcement is that we and BARDA have decided to move forward on our pandemic flu program with the H7N9 vaccine candidate using our Matrix-M adjuvant. And if you'll recall, we were the first company to have an H7N9 vaccine in human clinical trials. We were able to accomplish that from data publication of the gene sequence to the first human vaccine in 91 days, which is a significant accomplishment [ph].

So in addition, we also announced today that we closed on a financing that will allow us to fund our aggressive product development programs, and that financing was an $87 billion gross proceeds. And as I said, this will help fund our operations going forward. That's a very significant event for the company.

So with that, I'd like to turnover the presentation to Dr. Gale Smith. Gale has been with the company since 2004. He's on his 10th year, I guess, with the company, which is -- he's the old-timer in the company. Gale got his Ph.D at Baylor College of Medicine and Texas A&M, and he is the inventor of the recombinant insect-cell system since the early 1980s that we use as our production process. And as I've said, he joined the company in 2004. He is Vice President of Vaccine Development.

And with that, I'll turn it over to Gale.

Gale E. Smith

Stan, thank you. It's an honor to be here and part of this important announcement. As Stan indicated, the key strengths of our vaccine technology are based, first, on genetic engineering. Novavax vaccines are engineered from synthetic genes. Unlike traditional vaccines, for example, egg-based manufacturing or flu vaccines require the live virus. All of our vaccines do not require the actual [ph] pathogens but are made from synthetic genes. We have acquired, in much to Stan's efforts, an exceptionally strong force, exceptionally stronger scientific expertise both in vaccines and proteomics. And with that, we believe we've discovered importantly a new paradigm for the design of broadly protective vaccines, and RSV-F is an example that I'll discuss.

Again, as Stan mentioned, we -- our technology is based on the highly immunogenic nanoparticles, and I'll discuss 2 different forms of those with flu and RSV. And the protein expression system we use is suitable as higher eukaryotic cells derived from insects. They are lepidopterans. Those are butterflies and moths, and these came from originally from the ovaries of a lepidopteran and this is proven to be an excellent expression system for complex proteins. We can make proteins that are correctly folded and are native confirmation from virtually any pathogenic organism. And then this is now proven. It's embedded through the FDA, and there are a number of products that are on the market, including GSK's CERVARIX vaccine for HPV, PROVENGE from Dendreon and most recently, Protein Sciences' Flublok. So -- and then, also, as we mentioned, that we've acquired an excellent proprietary saponin-based Matrix-M adjuvant.

So briefly, the way this technology works is that we obtain genes typically from a public database like gene banks [ph], then one or more of these then are cloned into a single baculovirus. That baculovirus is cloned, purified. That produce work master and working seeds, and that's used to insect the -- our insect-cell line, Sf9 cells in over 2- to 3-day process. Either the antigens are assembled and secreted, such as influenza, and so the product is purified from the media or they remain in the cells, typically membrane associated, for example, RSV-F, and in that -- those cases, we purify the antigen, keep them conformationally correct and then after purification, they assemble into the nanoparticles. And the way that works for VLPs is that the major structural proteins, for example, for influenza are the matrix protein, hemagglutinin and neuraminidase. And when these are expressed in insect cells, they begin to assemble, the Matrix proteins facilitate secretion of particles that are acquired and these acquire the envelope of -- the lipid envelope off from the insect cell producing a particle that's structurally looks indistinguishable from the live virus, except that it contains no genetic material and is not infectious.

The other kind of nanoparticle we produced are protein micelles. An example here in this illustration is RSV-F. It forms trimers. Both trimers have a hydrophobic and [indiscernible] terminus. That assembles and forms a rosette-like structures. And this is important, both of these are, in fact, important because they produce what I'll refer to as pathogen-associated molecular patterns, or PAMPs. These PAMPs can simulate toll-like receptors, and that induces the innate arm of the immune system.

So first example that I'll give in more detail is influenza. In late March, with an the emerging potential epidemic of an H7N9, as you know, in China, and in March 31, a Chinese scientist published gene sequences of a number of these. And what was most alarming is that other than causing infection and death in humans at this time is that there were a number of genetic adaptations to make these more susceptible for human transmissibilities. So this was a potential pandemic. Day 1 for us was April 8 of this year, Novavax placed an emergency order for the 2 genes we needed in order to make an H7N9 vaccine, hemagglutinin and neuraminidase from the strain [indiscernible]. By day 9, the genes have been obtained and we were initiating cloning of these genes into a baculovirus. All 3 -- these 3 genes, along with the M1 matrix. By day 21, we were producing our first VLPs and Sf9 cells. And by day 28, we had immunized mice with an initial candidate version of the H7N9 VLP vaccine. And then as controls for the study, we had the H7N3 from Jalisco strains have been -- as is the highly pathogenic virus in method, and was killing birds in Mexico and had pandemic potential. And as another control, we used the bird flue, H5N1.

So the next slide summarizes the result of this study. We immunized and boosted mice, and then challenged them with a lethal dose of the H7N9 virus. And by day 7 or 8, all of the controlled mice had died, and in fact, the mice that have been immunized with H5N1 have also died. Surprisingly, the H7N9 was fully protective and H7N3 was also fully protective. When we analyzed the immune responses, H7N9 vaccines and H7N3, what we discovered is that, although both have produced good responses against neuraminidase that -- they didn't cross-react. The N9, which is an H7N9, and the neuraminidase 3, which is H7N3, did not cross-react, but the H7 -- the hemagglutinin did. So this cross-protection between the H7 -- from Jalisco and H7N3 [ph] were cross-protective.

So the next -- I was at the -- another recent potential pandemic is the SARS-like Mid-East Respiratory Syndrome, or MERS. There was a meeting this last weekend in Riyadh in the Kingdom of Saudi Arabia. And at that meeting, on the next slide, is a summary of what was presented by NIH scientists, who were invited to speak and asked if we provide them with some of the preliminary data that we had in producing a MERS-like nanoparticle vaccine. And in this mouse study, we immunize with either a SARS or MERS particle, and then drew their blood and analyzed this for functional neutralizing antibody. And immunization was done with or without adjuvants, including our Matrix 1 saponin adjuvant. And in both cases, SARS, which we had previously shown to be protective when challenged, and MERS vaccines induced very high levels of functional neutralizing antibodies, the highest being with our Matrix-M management.

So moving on to -- I'm on Slide 16 now, is that the RSV-F -- RSV vaccine is based on the fusion protein. F, which is one of the 2 major glycoproteins found on the surface of the respiratory syncytial virus. And the fusion protein is important for the spread of the virus, both from virus-to-cell and cell-to-cell. And it's conserved across both RSV-A and RSV-B types. And most importantly is that this F protein, the RSV-F, fusion protein, is a target for Synagis. Synagis is based on the monoclonal antibody developed by MedImmune, palivizumab. Palivizumab prevents -- is used in the prevention, in the passive protection against RSV in premature infants that are at high risk for RSV.

So what we did to develop the RSV vaccine that we have is to produce this in a form that is called post-fusion. The RSV-F is present in the mature virus; is metastable. The reason why this protein is unstable is because it contains a great deal of free energy that's needed for the fusion of the virus to the cell. And so when this virus, when this viral protein F undergoes, becomes proximity [ph] to and susceptible, that the pivotal [ph] cells and lungs [ph] undergoes conformational change, it releases all this energy that's needed for fusion to occur. But it also changes its shape. And we thought this could be important because, one, it occurs naturally; and secondly, because natural infection of RSV is not fully protective. So if we were to develop a vaccine that mimics exactly both the natural -- what occurs naturally, it was unrealistic for us to expect a different outcome.

And what you see, if you're looking at the slide, is that is e some of the example of the rosette or protein micelles that occur when we purify -- again, a post-fusion form of its F and then allow it to form particles. And another important asset [ph], I'll mention it again, is that when you make genetic modifications of a gene, they will support much broader claims to the vaccine. So when -- in a post-fusion RSV-F antigen that we have, this exposes not only the -- not only do we preserve, let's say, the neutralized HEp-2 cells that were there, but this palivizumab side, which is called -- which is -- called antigenic site II, is very highly conserved. There are no changes in these ammino acids from RSV-F as it has evolved. And in the post-fusion form, we found that its cryptic or hidden epitope is revealed. It's exposed.

And in animal studies then, we've examined that the antibodies that are induced against this and the other epitopes neutralized in protective epitopes through RSV. So typical study that we've done in cotton rat, with immunization boosting, we then challenged the animals with live RSV and then examined an amount of replication of the virus, either in the lung or in the nasal cavity.

So an example of the results that we've got are shown, if you're with me, on Slide 20. The 2 important controls; one is palivizumab, given as the standard human dose in this study, which is 15 milligrams per kilogram. And another control, just happens that there is a company sitting here that has Wyeth's Lot 100 formalin-inactivated RSV vaccine used in the 1960s that caused some disease exacerbation, disease enhancement in children. They still have that vaccine. So as a control in this study, we used lot 100 formalin-inactivated RSV. And what happens in summary is that this vaccine, the formalin-inactivated, induces antibodies that are not functional. And then you can see that in these results where there's a lot of total antibody produced but no detectable antibody against this palivizumab site II. In contrast to that is that our vaccine induced very high levels of palivizumab-competing antibodies. They were actually even greater than what we've seen again with the standard dose of palivizumabs. We have 900 micrograms per milligram serum, palivizumab-like antibodies versus 88 micrograms per milligrams that's given -- RSV given passively.

So protection. It turns out that the virus, the virus can protect -- what palivizumab protects against lower respiratory virus protection. That's one of the basis that MedImmune used for approval of the vaccine. They determined a dose that would result in a hundred-fold reduction of virus replication in the lungs and challenge. And so what we showed in this initial study that immunization also resulted in a complete absence of detectable virus in the lungs of these challenged animals, whereas in contrast, it was -- that the formalin-inactivated virus was not protective. And most interesting was in the upper respiratory, in the nasal titers of RSV. If we look into those virus, look at those, both -- although the palivizumab was not completely protective [ph], that again, [indiscernible] given with alum, the RSV-F plus alum was fully protective, preventing replication as well as RSV itself.

So in summary, we determined the study that the neutralizing antibody responses that we see in our vaccine are against palivizumab, this is a cryptic site II, as well as we have monoclonals at the other known neutralizing antibody sites within RSV-F, they are also recognized.

Now this tells us that we're making antibodies against this site, it doesn't necessarily indicate that they are responsible for protection, that they are functional. But the measure for how functional our antibodies to this palivizumab synergies-like studies compared to the actual monoclonal antibody, we did a passive study in cotton rats. And we used a dose range of palivizumab and the palivizumab equivalent antibodies from immunized cotton rats, given passively in a range of 0.6, 1.4, 5.6 milligrams per kilogram, that's a range known to induce protection that is a hundred-fold reduction or more of virus with palivizumab.

And so we are comparing on the same dose basis. The efficacy or ability of our vaccine to -- or our antibody to -- produced by our vaccines to protect cotton rat. 24 hours after the ease [ph] of serum from our immunized animals given to cotton rats, we measure -- we could measure antibodies within the blood. They were then challenged with RSV and then we measured lung titers as far as, are they able to protect 4 days after challenge. And if you look -- and our palivizumab, given at the highest dose was protective. And all doses of the serum from our immunized animals 5.6, 1.4, 0.6 milligram per kilogram was also protective. So what does this mean? What it means is that on a 1:1 basis, a milligram-per-milligram basis, RSV induced palivizumab-like antibodies in our vaccine are least equivalent, if not better, or more protective than palivizumab itself.

So in summary, sequence modifications to RSV-F produces a post-fusion antigen that allowing for broad patent claims. The recombinant F post-fusion is properly folded, efficiently expressed and produced. RSV nanoparticle vaccine induces high levels of competitive antibody against the cryptic, potentially hidden RSV-F palivizumab epitope. The vaccine protects against RSV infection, against upper and lower respiratory tracts and very critical is that our F nanoparticle vaccine induces competing antibodies with levels and avidity predictive of protection against RSV.

Stanley C. Erck

Gale that's -- this is Stan again. Gale, that's terrific. Thank you very much. All the work that Gale has been describing forms the basis for our product development and has allowed us to get into clinical development.

And to that end, we have been lucky enough to bring on Dr. Lou Fries, who is our VP of Clinical and Medical Affairs. Lou came from -- got his M.D. at Johns Hopkins. And after working as a clinician, dove into the biopharmaceutical field at ID Biomedical among other places, and help get their flu vaccine approved by the FDA. Subsequently, that accomplishment resulted of being acquired by GSK in 2004, I think it was. And from there on, Lou brand their influenza -- had protected their pandemic influenza program.

When we stole Lou, we wanted to jump back into the frying pan of biotechnology from GSK back in 2011. And since then, he has been running our clinical development program, in particular, focusing on both the flu, influenza, seasonal and pandemic influenza programs.

So with that, Lou, I'll turn it over to you.

Louis Fries

Okay. Thank you, Stan, and good morning to everyone on the call. If we can move on to Slide 27. We'll go and take up the discussion of our seasonal and pandemic influenza programs. As you know, the market for seasonal influenza vaccines is in the range of $3 billion across major markets in the industrialized world, and that's a market which has continued to grow, particularly since the early part of the 21st century. And in the United States, in particular, it's been boosted by the fact that in 2010, the ACIP made influenza a universal recommendation.

In response to that, there is an improving supply of influenza vaccines in the United States, which is now in the range of 150 million doses annually. But, of course, as you know, given the U.S. population, that's actually less than half of the requirements to satisfy universal vaccination recommendation. So there is continued room for that market to grow. The U.S. remains the largest single market in the world, and it accounts for about 40% of sale of influenza vaccine.

But the unmet medical need both here and elsewhere remains large. Vaccines for children and the elderly are not terribly satisfactory in their efficacy. They are better than nothing, but they could be improved. And there is a need for new and improved technologies of the 21st century to replace egg-based production or, certainly, to supplement it [indiscernible] technology that goes back to the 1940s. It has served well, but it is slow and it is infrastructure-intensive.

One of the major features of the influenza vaccine world today, is the market, at least in industrialized countries and prominently in the United States, is transitioning rapidly from trivalent to quadrivalent vaccine. And the recognition that there are not usually only 2 influenza A virus strains, but there are also 2 different lineages of influenza B viruses that circulate annually, they can circulate in almost equal proportions and they don't cross-protect very well. That's been shown in multiple epidemiologic studies. And on the basis of that, virtually all major influenza manufacturers are now moving to a quadrivalent vaccine that includes 2 B strengths.

There is, of course, also the lurking fear of influenza pandemics, which are episodic events that occur when new virus subtypes to which the human population that's been living is naive, get reintroduced to the population typically from birds, sometimes, from other species. And pandemics have the potential for massive mortality, huge healthcare costs and in a world of just-in-time medical supply, delivery and air travel potential for massive societal disruption.

You all remember most recently, the 2009, '10 swine H1N1 pandemic that was fortunately, by and large, a virus that gave rise in relatively mild illness, but it did, nonetheless, cause significant disruption. Of note, the United States government purchased and distributed approximately 120 million doses of vaccine to address this pandemic at an estimated cost of $1.72 billion. And unfortunately, virtually all of that vaccine arrived too late to do any good. The uptake of the vaccine coincided with the downstroke of the pandemic transmission. And because of that last problem, Novavax is being actively supported by BARDA, the Biological Advanced Research and Development Activity (sic) [Authority], under the Assistant Secretary for Preparedness and Response and HHS.

Okay. Now if we move to Slide 28. I want to come back and remind you our influenza vaccine structure. This is unlike the RSV candidate that Dr. Smith was telling you about. The flu vaccine is produced by infecting Sf9 cells with baculoviruses that encode 3 influenza proteins. We'll talk about those proteins -- the importance of those proteins in a minute, that they include hemagglutinin and neuraminidase and a structural protein M1. The influenza vaccine is formed in the form of virus-like particles, which buds in the membrane of Sf9 cells and are then purified from the medium logic [ph] produced the vaccine. And as you can see in the illustration on Slide 28, there are 140 to, say, 190-nanometer particles that for all the world look exactly like influenza vaccine and displays hemagglutinin and neuraminidase on the surface, but they contain no influenza RNA, and so they're completely noninfectious.

Now on Slide 29, we have a cartoon of hemagglutinin, which is the classical protective antigen and influenza -- antibody responses to hemagglutinin are the ones that's measured in most influenza vaccine programs, and the antibodies that are measured are the antibodies to that little yellow site, right up in the head of the molecule in the HA1 portion. That's the receptor-binding site. That's the site that allows hemagglutinin to attach the virus to the target cell. And antibodies to that little yellow site block attachment of virus to cell, and they're protective. One of the problems with those antibodies and the reason why influenza vaccine changes every year is that those antibodies are very highly strain-specific. Although they do dominate the immune response, you have to change the vaccine continuously to keep up with changes in the virus. If you move down the hemagglutinin structure, there is -- there are a series of epitopes to -- immunogenic epitopes lower in the molecule in the HA2, or stem region, and those are receiving increasing attention because antibodies to HA2 can block fusion of the virus and cell membranes. And therefore, they can prevent access to various genetic material into the cell. Those sites are a lot more conserved. But just as RSV hides its key F protein sites from the immune system, the influenza virus hides those stem sites, and they're not -- and they do not induce vaccines efficiently with the current influenza candidates. Now what we found though is that with the Novavax influenza vaccines, we really get 3 shots on goal in terms of attempting to prevent illness. The figure you see on Slide 30 comes from a paper, which was based on some of our initial H5N1 vaccine studies and was done in collaboration with Dr. Hana Golding's lab at the FDA. And what you see here, neatly color-coded, actually, identically to the slide before for reference, is that our vaccine does induce classical hemagglutination-inhibiting antibodies that block virus interaction with cellular receptors. It does produce responses to the HA1 receptor-binding domain, which is shown here in yellow. However, our vaccines also evoke antibodies to the conserved cryptic sites that assist in virus fusion down in the stem -- HA2 stem region, and you see those illustrated in the blue blocks. So this pattern of immunogenicity is distinctive from egg-derived vaccines. In fact, this kind of pattern is only seen with egg-derived vaccines in the presence of adjuvant, whereas the immune responses you see on this figure were evoked by our vaccine without adjuvant. Last but not least, we do cover off that other antigen, neuraminidase, and the binding -- the epitopes within neuraminidase that our vaccine creates antibodies, too, are illustrated in black. So we have 3 shots on goal, the receptor-binding site, the HA2 stem region and, finally, neuraminidase. All of these immune responses are evoked by the Novavax vaccine construct. So where are we now with flu? In 2012, we did a Phase 2 seasonal influenza vaccine trial. That was an important milestone for us in that we transitioned to a quadrivalent from a trivalent vaccine. We had no safety problems with that, and there was no evidence of interference by adding the fourth strain. We demonstrated that all 4 strains in the vaccine were immunogenic. We have had -- we previously announced that we fulfilled FDA's seroprotection criteria for all 4 vaccine strains, and we achieved seroconversion criteria for 3 of the 4 strains. Now based on that, we wanted to deal with that fourth strain in seroconversion. It was a B strain that is notoriously difficult, but we wanted to optimize the product to the extent we could. And so, in 2013, we've invested a lot of time in actually working on the product to see if we could resolve the low immunogenicity with that fourth strain. We've developed a range of analytical methods, including some very powerful mass spectroscopy methods that have provided new guidance on how to protect our antigens during the purification and optimize formulation. And we've, in fact, found steps in our process that could be optimized to markedly protect the antigen from alteration that would reduce its immunogenicity. Based on that technology, we finalized the manufacturing process, as Stan has mentioned earlier. We've identified key control parameters in that process that allow us to optimize the immunogenicity across multiple strains, and we've demonstrated that that's true in animals. We've demonstrated that -- we've shown that data to BARDA, and they've concurred that we should initiate manufacturing for our next Phase 2 in young adults to support a clinical trial initiation in Q1 of '14. And that manufacture is underway as we speak. We intended that the trial will give us data for an end of Phase 2 meeting with FDA in mid-2014 that will enable us to go forward to a clinical endpoint efficacy trial in late '14.

On Slide 32, our diagram, our pathways forward for seasonal vaccine, we will initiate a Phase 2 in young adults to confirm our dosing in 18- to 49-year-olds in Q1 of next year, get data from that by midyear to allow us to have an end of Phase 2 meeting with FDA and proceed with Phase 3 efficacy trial, which will also be carried out in young adults, and which will support clinical lock consistency as well. At the same time as we're doing that Phase 3 trial, we will do dose-finding in persons over 49 years of age, and that will give us data on which we'll base the subsequent immunogenicity trial with the elderly. The Phase 3 efficacy trial will give us data that will support BLA for young adult indication, and that will also importantly support our pandemic vaccine BLA for conditional approval. Based on both the efficacy trial and the Phase 2 in the elderly, we'll conduct a Phase 3 immunogenicity trial in the elderly, bridging back to the young adult data, and that will allow us to proceed to a supplementary BLA for the elderly indication. Now since we don't know exactly what data will flow from the Phase 3 and the Phase 2 elderly dose-finding study, we don't know exactly what that last immunogenicity trial will look like yet. We'll have to discuss that with the FDA. But if we can go forward in an abbreviated fashion, both the BLA for young adults and the AZ BLA for the elderly could be a single application.

Now go to Slide 33, I want to touch on our pandemic program. As you know, BARDA has supported a Phase I exploration of VLP avian influenza antigens with a couple of different adjuvants. We've tested the TLR-4 agonist adjuvant. We've also tested the saponin-based adjuvant as the matrix, and both have been successful with our avian H5N1 antigen. We are currently carrying out the world's first Phase I trial of an A/Anhui H7N9 (sic) [A/Anhui/1/13 H7N9] in Australia. That was initiated on the 8th of July in 2013 with data coming up. BARDA has instructed Novavax that they'd like us to continue to pursue H7N9, which has become important in the U.S. government's pandemic planning. And in that next trial, we'll adopt our Matrix-M adjuvant. We have good confidence in that. We've shown in animals that it performs essentially identically with the matrix. And we know that from prior human trials, we have our H5N1 vaccine flu that works well. So we have a Phase 1/2 trial with Matrix-M under the US IND that will also be initiated in Q1 of next year. Our pandemic plan will proceed to a Phase 2 in elderly subjects based on the adult data and then a Phase 3 immunogenicity to support licensure.

The next Slide, Slide 34, shows you a summary of our A/Indonesia (sic) [A/Indonesia/05/05] data with Iscomatrix. There are a couple of interesting points here. First of all, you can see that by the shifting of the curves to the right, in the purple and green curves with the yellow symbol, you can see that we're able to elicit strong responses, stronger than egg vaccines, with our antigen alone at 15- and 45-microgram doses. But with the saponin-based adjuvant, we can markedly shift all the curves to the right and have at least twelvefold antigen-sparing. This is with the antigen that's in the vaccine. If you go to Slide 35, you see that we get quite vigorous responses to an H5N1 antigen that aren't in the vaccine. And one of the key features of pandemic preparedness is to able to get responses that spread across multiple strains, and here is evidence that these various formulations also give you pretty strong immune responses to A/Vietnam (sic) [A/Vietnam/1203/04], which is rather distantly related to A/Indonesia (sic) [A/Indonesia/05/05].

Lastly, on Slide 36, as I've mentioned, one of our additional shots on goal is neuraminidase. And this data shows you response to neuraminidase-inhibiting antibody levels in that same trial, and it shows you that without adjuvant in the 15- and 45-microgram groups, two to threefold responses and anywhere from five to sevenfold responses in the groups that received adjuvant containing vaccines.

Slide 37 is one of the key points of interest of BARDA. Dr. Smith has already shown you events through May. This is a time line for our response to the H7N9 incident in China. Dr. Smith took you to mid-May, when we were doing animal efficacy studies. At the same time, they were doing animal efficacy studies, we had completed preparation of a GMP master seed virus and have begun production in late April of our GMP drug substance, which was finalized by formulation right at the end of May. The long pole on the trench here is all the testing -- the QC testing that's involved. But as you see, we were able to release products on the 28th of June, which is basically an 80-day response inside BARDA's required 12-week window. And we shipped products to Australia, and we were able to initiate a clinical trial on 8 July. Now we didn't make more product at that time. But at 28 June, we would have been able, had this been a pandemic, just to step on the accelerator and begin shipping clinical material at that time. This contrasts with the 2009, '10 response in which material reached the clinic in October.

The next slide, I will not spend a great deal of time on Slide 38. This just reiterates the data that Dr. Smith showed you earlier that shows protection with our product and the animals against lethal H7N9 challenge. And the next slide, Slide 39, shows the clinical trial material, which is now being evaluated in Australia. Our pandemic licensure pathway is quite straightforward: Phase 2 in young adults, followed by a Phase 2 dose-finding in the elderly, leading to an immunogenicity and lot-consistency study that will give us data for accelerated approval, which will be converted to provisional approval following the acquisition of seasonal efficacy data.

The final slide of this section, Slide 41, shows you our near-term upcoming milestones. We will have animal efficacy results that have already been delivered to you now. We will have immunogenicity data from the ongoing trial in Australia in Q4. We will launch trials with the seasonal trial for dose confirmation in the first half of '14, initiate a Phase 3 trial for efficacy in the second half of '14, and we'll also be initiating our next pandemic trial in early '14 and have data by the end of '14. Thank you.

Stanley C. Erck

Lou, thank you very much. Okay. So we'll catch our breath for a minute, and we'll have a little Q&A time. So the Q&A is structured for those of you who have questions on the core technology or influenza program. Those of you who have RSV questions, if you can hold those questions until later, we'll have ample time at the end of the RSV presentation. So I'll now open it up to any questions you'd like.

Question-and-Answer Session


[Operator Instructions] Our first question comes from George Zavoico of MLV & Co.

George B. Zavoico - MLV & Co LLC, Research Division

Congratulations on moving forward here in and laying out the plan going forward. You talked a lot about H7N9, and you mentioned the meeting in Saudi Arabia that you guys went to. And you've also started a MERS trial as well, I believe. So where does the MERS stand in all of this planning?

Stanley C. Erck

So the Saudi Arabia presentation was made actually by the NIH, and it was showing data that was derived from our collaboration with researchers at the University of Maryland. So that's where the program cents. We have a vaccine candidate that's been tested in animal trials with positive results, and we'll see how that plays out.

George B. Zavoico - MLV & Co LLC, Research Division

What's BARDA's interest in the MERS? I mean, I think MERS has spread a little bit further afield than H7N9, and it seems that BARDA...

Stanley C. Erck

So BARDA's not specifically funding this program. Our program is a seasonal pandemic influenza. But remember, BARDA is very interested in all emerging biological threats, both man-made and natural. So they have a great deal of interest in this program as well.

George B. Zavoico - MLV & Co LLC, Research Division

Okay. And Gale, at least you said that you guys were able to overcome some of the problems you had been getting, the seroconversion of the B strain. I guess you'll be presenting that later. I imagine there's not a whole lot more you can say about it right now, is that correct, other than that you've solved most of the issues?

Gale E. Smith

Yes. I think one of the issues that we've faced is that we have to inactivate the baculovirus in our system, which is not actually a safety issue. But just by regulation, we have to inactivate it. And some of the steps that are taken to do that can induce damage in some of the vaccine antigens. And in fact, we have what I think is some unique data in which we probe the structure of each antigen with mass spectroscopy and have found exactly what steps in the process damage it. And using that mass spectroscopy data as a guide, we've been able to refine the process to minimize that damage and improve the immunogenicity, not only of the B strain, but actually across several strains.

George B. Zavoico - MLV & Co LLC, Research Division

And I presume that this is proprietary. Are you doing -- writing some patents on this?

Stanley C. Erck

It is proprietary. Yes. Yes.


[Operator Instructions] We do have a question from Bill Tanner of Lazard.

William Tanner - Lazard Capital Markets LLC, Research Division

Stan, just on the pandemic, just if we assume that the vaccines at Novavax is going to develop for various viral strains are safe and effective and that manufacturing is not an issue, how should we think about long-term, how this plays out from a commercial perspective for Novavax whether there -- it would be contemplated, the governments would actually stockpile, or do you think the utility of the technology is really going to be more for rapid response that just whenever something arises that's when a government might step in and ask Novavax to help out?

Stanley C. Erck

Well, that's a great question. I keep asking myself that same question all the time. It's somewhat difficult to predict the actions of the U.S. government or other governments. But if history prevails, BARDA and the U.S. government have, in the past, stockpiled hundreds of millions of dollars of H5N1 vaccine. They have purchased, as I think Gale pointed out, over $1 billion worth of H1N1 -- Lou pointed out the H1N1, and I think that the government does stockpile. Having said that, there is not a stockpile plan in action like this minute for H7N9, but I would be surprised if there weren't at some point.


Our next question comes from Greg Wade of Wedbush.

Gregory R. Wade - Wedbush Securities Inc., Research Division

Lou, can you just review for us what data you have with adjuvants as seasonal flu vaccine? Which adjuvants did you use? And I understand you're going forward with the Matrix-M. Why do you think that that's the right one to go with?

Louis Fries

Okay. First of all, we don't have any data and don't, at least in the short term, intend to generate data with adjuvant in seasonal vaccines. We focus, for the moment, on the pandemic vaccines because the risk-benefit ratios surrounding using adjuvant is very, very clear there. Now we have data on, at this point, between animals and humans, 3 different adjuvants, actually, 4, if you consider aluminum as an adjuvant. And aluminum does work to a very modest extent in animals. It works. It probably works less well in people. That's been tried in the real world with egg-derived pandemic vaccines, and it doesn't work very well. We have data with TLR-4 agonist, which is basically a lipopolysaccharide mimic. That worked quite well. We also have data now in humans with saponin-based adjuvant Iscomatrix, and we have data in humans and animals with Iscomatrix. We have animal data with Iscomatrix and animal data with Matrix-M. Matrix-M is very closely similar to Iscomatrix. They differ in the way the final formulation of the adjuvant is made, but the active products in them are essentially identical. And because we have animal data that suggests that Matrix-M is as good or better than Iscomatrix, we have essentially 100% confidence that Matrix-M is going to work well for us and is going to have an acceptable safety profile.

Gregory R. Wade - Wedbush Securities Inc., Research Division

And Stan, can you just help us to understand the BARDA funding. Obviously, you are funded for seasonal flu through licensure and H1N1. How does H7N9 play into what the government's contracted you to do at this point, and would you anticipate that they want you to work on that if you'd be receiving additional funds for that afterwards?

Stanley C. Erck

Okay. I'll take that. So Greg, yes. As most people know, I think is the contract is a cost-plus-fixed-fee contract, covering the development of both the seasonal pandemic influenza vaccine through the licensure. The first trial that we did was in H5N1 because that was the strain of most interest to BARDA at that point. Since we shifted over to H7N9, BARDA has agreed with us that that's a very important program going forward. So we have merely switched virus strains from the H5N1 to H7N9. So our next trial will actually be funded under the current BARDA contract with H7N9.


I'm showing no further phone questions.

Stanley C. Erck

Good. All right. So let's move on to the world of RSV. We are -- I think everybody knows that -- at least we feel that we're the leading company in developing an RSV vaccine candidate. We have targets in 3 different areas of RSV vaccination. One is to protect the youngest infants through maternal immunization. The second is to protect younger children, pediatrics, age 6 months to 6 years. And then, finally, at the other end of the age spectrum, to have a vaccine that will be protective in the elderly adult population. RSV is a very significant problem globally. And one of the, what is called, a key opinion leader, one of the world's experts in this field is Dr. Tony Piedra, and we are lucky to have him off from Houston today. He is the professor of Molecular Virology and Microbiology at the Baylor College of Medicine, and he is very experienced in both basic research with the RSV and the viruses and influenza and is an experienced clinical investigator in both influenza and RSV vaccines and has provided us valued advice over the years. I think he's also the king of micro neutralization assays. And probably, he's done more than anybody else in the world, I would expect, Tony. And so Tony's going to give us an overview of the RSV landscape. So thank you.

Pedro Piedra

Well, Stan, thank you, and good morning to all of you. If I can start with features of respiratory syncytial virus, this is kind of to lay out some of the issues that we know regarding RSV and that is this is a mucosally-restricted pathogen in the immunocompetent host. And what that really means is that this virus replicates efficiently at the mucosal surfaces or epithelial cells of the respiratory tract and does not cause viremia or systemic disease. And that becomes important with regards to what type of immunity you expect to acquire from mucosally versus systemic pathogens. And for mucosal-restricted pathogens, the path of immunity is very self-limited. And so, it's not a sterilizing immunity. For example, for other paramyxoviruses, for which respiratory syncytial virus belongs, measles and mumps will cause good sterilizing immunity over time, and those viruses cause systemic disease, while RSV and parainfluenza type 3 do not, and they are mucosally-restricted. For RSV, the illness burden and disease severity is really greatest at the extremes of life and that is the young and the old. And one expects because you do not have sterilizing immunity for recurring infections to occur throughout life, and that's exactly what happens. And with repeated infections, the illness tends to be less severe until you start to get older and also for those who have underlying co-morbid or risk factors such as underlying lung disease or heart disease. With RSV, it is not just 1 strain, there are oftentimes multiple strains that co-circulate during any epidemic, and then it becomes very important that one chooses the appropriate antigen to induce broadly reactive proteins or broadly reactive immune response. And then a very important concept is that we know from our -- now for some time that neutralizing antibodies found in blood, in the serum is very important in protecting against severe disease in the infant. And that has been demonstrated for maternally-derived antibodies for passively-administered monoclonal and polyclonal antibodies, palivizumab and RSV A and for infection-induced. And that is, with repeated infections, you have higher levels of neutralizing antibodies that reduces the risk for more severe disease. If I can have the next slide, and this is a very old study, but it tells a very important picture that currently is true. And that is during the fall and winter months, there are a battery of respiratory viruses that circulate at any given time, and the 2 major respiratory viruses that afflict the children, as well as adults, are respiratory syncytial virus and influenza. And they oftentimes will co-circulate. In the southern states, RSV occurs a little bit earlier than the influenza. In the northern states, you oftentimes will see flu occurring a little bit earlier than respiratory syncytial virus outbreaks. But what is true is that, every year, we will have annual outbreaks of both RSV and influenza. And for influenza, for which we have had vaccines, now currently universal vaccine recommendations since 2010, we have not yet been able to control influenza outbreaks and for RSV, I would expect something similarly.

So what is the impact of RSV disease in children? One, globally -- and here, the slides really focus on the United States. Understand, globally, there are, on an annual basis, somewhere in the neighborhood of 60,000 to 200,000 deaths attributed to RSV and over 30 million cases of severe lower respiratory tract illness that are attributed to RSV.

Locally, in the United States, it is the most important respiratory pathogen of infants and young children. And by the 2 -- by 2 years of age, nearly all children will have seen RSV once and many of them will have seen RSV twice. With primary infection or the first infection, about 30% to 40% of infants and young children will develop lower tract respiratory illness, many of them will require visits by their doctors or the emergency room and less of them will be seeing -- or be hospitalized. About 2% to 3% of the total U.S. population of children under 1 year of age will be hospitalized secondary to RSV infection. And the major presentation for RSV is bronchiolitis and/or pneumonia.

The next slide looks at the burden of illness caused by RSV in children, and this is a description of a recent study by Caroline Hall and other investigators that try to get a better handle on RSV. And we knew the impact that it had on hospitalization, but we had less knowledge on the impact that it had on total illness burden, including outpatient disease.

And what this shows you is that in any given year, over 2 million children will be seeking medical attention due to RSV. A minority will be hospitalized 3%, but that is quite a large number if one thinks that RSV is such a ubiquitous pathogen worldwide. About 25% of the illness burden attributed to RSV will result in emergency room visits, and the vast majority will be treated at the medical home. And the majority of the illness that is treated at the medical homes will occur in another population of young children, and that is 2 to 5 years of age. So RSV is not only restricted to the very young in terms of hospitalized disease, but also in terms of [ph] appreciable amount of illness burden in the old or young child, and that is the group 2 to 5 years.

The next slide looks at RSV infant hospitalization, and this was a study that was done -- sponsored by the Center for Disease Control. And it looked at the incidence of hospitalization in the United States by month, and it also looked at another population of American Indian or indigenous population that have higher risk of hospitalization attributed to RSV.

And what is most telling here is that within 3 months, about 50% of the hospitalization attributed to RSV in the first year of life will have occurred. And in the subsequent 2 months, in -- you will see about 70% of all hospitalization attributed to RSV. So if one is considering a maternal immunization strategy, one can see that this is really prime target for prevention, where one would expect that if we're able to boost maternal antibodies to a high level that we would expect at a minimum 3 months of protection against RSV-related hospitalization and possibly expand through the first 4 to 5 months, which would mean that it will have a very significant impact on RSV hospitalization in the first year of life.

The next slide looks at RSV infection rate in children less than 5 years of age by treatment side, and by treatment site really looks at whether they're hospitalized, they go to the emergency department or they're seen in pediatric practices. And you can see that the overwhelming burden of RSV disease is seen at the pediatric practices, whether they're infants or they go out to 2 to 5 years of age. Hospitalization, on the other hand, and the vast majority of hospitalization in children will occur within the first 12 months of life, in particular, within the first 6 months of life.

There is a notable amount of hospitalized disease that occurs from 12 through 59 months of age, and that accounts probably about 20% of all hospitalizations in infants on -- in children under 5 years of age due to RSV. And so the main point here is that RSV again causes considerable amount of burden in the health care environment and children under 5 years of age, whether it be hospitalized disease or in the outpatient setting.

The next slide again highlights the importance of RSV in the pediatric population. And this is a study that -- data that was produced a number of years ago and it still stands, and it shows the number 1 cause for hospitalization in infants is RSV bronchiolitis, and the number 3 cause is unspecified pneumonia for which RSV probably contributes to about 25% of the pie in this area. And so one can say that RSV plays, again, a very dominant role to the pediatricians and to the pediatric population in terms of morbidity and severity of disease.

In the United States, we know that mortality associated with RSV is not a common event. It probably occurs approximately 500 on an annual basis if we compare that to influenza both in -- these are estimates in the United States and in England. One can see that RSV in -- causes at least equal amount of deaths in children under a year of age. And I can tell you that this year, for influenza, in pediatric populations, there were about 164 deaths that have been reported. And we know that for every death that is imported, probably 4 goes unreported. And so the main point here is even though we have very good support of treatment in industrialized settings, we still see appreciable death attributed to RSV.

We always talk of -- the next slide looks at an important concept, and that is we'll always talk about acute diseases associated with RSV and the acute disease is bronchiolitis and pneumonia. But something that has been developed now over the last decade to 15 years are also chronic complications attributed to RSV, and one of them is recurrent wheezing during the first decade of life.

And this was a very pretty study that was done by Tucson that follow prospectively a cohort of infants shortly after birth over really 20 years of life. And here, we present data on the first 13 years. And what it demonstrates is that for children who acquired RSV infection during the first 3 years of life, and this was not severe disease, this was outpatient disease, primarily lower respiratory tract illness, for the next decade of life, they had an increased risk of wheezing, recurrent wheezing or wheezing, and it was much higher, it was significantly higher compared to children -- young children that were not documented to have an RSV infection. And so the chronic consequences of RSV are something also to be taken into account when one is thinking about the long-term benefits of a vaccination strategy.

To move a little quicker, children are not the only one that are affected by RSV. Understand that RSV causes infection throughout life, and older children with comorbidities, such as asthma and cystic fibrosis, oftentimes have pulmonary exacerbations that are linked to RSV. And we know, in the world of cystic fibrosis, that they can also cause an accelerated decline in pulmonary function, which causes considerable amount of morbidity in the CF population.

If we look at adults, as adults get older, they have higher rates of comorbid conditions, and it is that population that also has higher rates of severe consequences from RSV. In particular, if you have underlying lung disease, such as chronic obstructive pulmonary disease. And in the bone marrow transplant field, RSV can often lead to a fatal infection, especially if they develop lower respiratory tract illness.

Lastly, from the groups, we know that elderly adults also succumb from RSV. It is a major pathogen in this population, probably second to influenza. It causes about 10% of community-acquired pneumonia and also, as one can see, appreciable amount of hospitalization and mortality. If one was thinking about goals for a vaccination program against RSV, which I have thought for many, many years, at the very least, we would like to be able to prevent death and hospitalization. If you have a more potent vaccine, somewhat a vaccine that can produce motavizumab-like antibodies, you would like to be able to extend it to outpatient lower respiratory tract illness. And if you have a significantly vaccination coverage, you may even have some indirect benefit by providing a herd effect. You will also like to reduce some of the secondary complications associated with RSV, in particular, the long-term consequences of reocurrent wheezing.

And lastly, with regards to the strategies for the prevention of RSV disease, there are a number of strategies that one can choose, depending on the group that one is going to target. But maternal immunization is a very useful strategy, and it will have a very visible effect on infants, since they have very high attack rates and hospitalization risks during the first few months of life, and there really would be very few other alternatives that could protect infants during the first few months of life.

The other is primary immunization of young children. We already saw that they have a large illness burden. And this is a group that would also benefit, as well as groups that have risk conditions or the elderly group. And so one can think about the RSV vaccination strategy and also look at influenza vaccination strategies as a roadmap to how to go into RSV.

And with that, I will stop. Thank you.

Stanley C. Erck

Tony, thank you very much. That's really helpful in highlighting the problem that we're trying to attack here. I'd like to turn it over now and we're trying to get a solution, and Dr. Greg Glenn, who's our Chief Medical Officer, is the program manager of the RSV program, the champion, I guess, and he'll run through our clinical development program.

Greg comes to us as a former pediatrician, trained while he was in the Army and their pediatrician in the Army, and then led [ph] at the Walter Reed Army Institute of Research, began a career in vaccine discovery and was the scientific founder of a vaccine company called IOMAI, which delivers vaccines to the skin, and joined us in 2010 as Chief Medical Officer.

And I'll turn it over to Greg.

Gregory M. Glenn

Good morning. Thank you very much for that introduction. And I really appreciate the interest in Dr. Piedra, in our program. He's provided tremendous perspective as has many of our advisors.

So let's turn to Slide 61. I think Tony has made the point. And when you have a very important medical need, we consider RSV as a predictable epidemic and a serious medical disease.

So if you go to Slide 62, I think it's important to point out a few things from a clinical standpoint that are important. So RSV, like flu, is a changing virus. So from year to year, there is alteration and a lot of those changes are mostly focused on the G or surface glycoprotein. So I've illustrated this here. You can see a, let's say, a cartoon of the RSV virus budding from the host cell. You see the surface glycoproteins; the F protein, which Dr. Smith discussed; and the G protein, which is an attachment protein. That protein induces very robust immune responses. And overall, it's important to know that this virus will change from year to year.

And you can see below an analysis of multiple strain of the RSV virus. And what these investigators looked at were the number of changes in the amino acid sequence, which obviously drives the protein structure. And you see, on the top, the whole red box is there, the G protein has a lot of bars and those represent substitution -- amino acid substitution at different sites in the G protein. So this G protein drives the variability from year to year of the RSV viruses.

On the other hand, the fusion or F protein is highly conserved. You can see few bars there. And in fact, there's a site called Site II on the fusion protein, which is very, very highly conserved, changes little from year to year. And this is, Gale mentioned earlier, it's a target of important licensed [ph] monoclonal antibody, palivizumab or Synagis.

If you turn to Slide 63, I just like to make a few comments about Synagis. It is a target that -- it is a monoclonal antibody that targets the site, which is, if you look on the right of the diagram, you could see the red areas, targeted by both palivizumab and a follow-up product, motavizumab. Motavizumab was developed as a higher-affinity monoclonal antibody and in our view, does provide some increased efficacy and some -- these monoclonal antibodies have been evaluated in 5 randomized clinical trials and shown to prevent RSV disease.

So this is important for us. This data is really unique for a novel vaccine program that has a data set of this nature, of this magnitude on mechanism of action by which this may be protective and it derisked the program from Novavax insofar as we can induce this type of activity, which I think we do very robustly, and I'll show you that in just a minute.

The last point I'd like to make on this particular topic is Slide 64. And I wanted to point to what I think is slight [ph] -- as direct evidence as possible, what our vaccine inducing is type of vaccine that could work, so in -- during the development of motavizumab as the follow-up high-affinity monoclonal antibody binding to the F Site II and the F or fusion protein of RSV, it was evaluated in term infants. And as Dr. Piedra mentioned, RSV is a disease of healthy children. And in this case, this trial was done in a healthy term infant population, and use of the monoclonal antibody that binds this site resulted in 83% reduction in the risk of hospitalization in part a large trial. So we know from the clinical trials that binding through this fusion protein at this site can be quite effective by prevention of RSV disease.

So on that important note, turning to Slide 65, as we mentioned earlier, we see 3 target populations for the vaccine. The vaccines can be used to prevent the disease in young infants where the rates of hospitalization are highest through this early immunization. Now secondly, we see infants and children as having the need, say 6 months, 6 years, in [ph] prevention of the medical burden of hospital -- sorry, office visits, ER visits and the sequel [ph] of wheezing. And then finally, you can see we'd like to use of this vaccine in the elderly where there is a significant disease burden for both morbidity and mortality. I put these big checkmarks so you wouldn't miss. In our view, we have now induced the palivizumab-like antibodies that bind to this Site II, which are, in our view, have been shown to be protective.

Now in 2 of the 3 populations, and I'll take you through that data on the next slide -- if you go to Slide 66, Novavax conducted 3 clinical trials. The first trial, Study 101, is done in healthy adults, 120 subjects, and we made what I think was a very important [indiscernible] observation for our vaccine. These observations that -- in subjects, these will be people 18 to 49, who have had decades of exposures to RSV. They do not develop antibodies that bind avidly to this Site II on the F protein, as I've been describing.

However, after vaccination, with our antigen RSV-F protein nanoparticle, they do induce at very high levels of palivizumab-like antibodies. The [indiscernible] was very important finding. Those antibodies are made in concert with neutralization, and I'll show you some of that data in just a minute. So that trial was a relatively small trial. The group where we saw the most robust groups frankly was quite small with 13 subjects, so we were anxious to confirm that result in the follow-up trials.

You can see Study M201 was now done in a child-bearing age, with a population where we think the -- we need to develop an important safety and immunogenicity database. And in that population, we again saw at the -- day 0, these again vis-à-vis subjects 18 to 35, they do not make vizumab antibodies after decades of infection. With our vaccine, we saw very robust palivizumab antibodies. And then again, most recently, this study was by presented by Dr. Lou Fries at the ICAAC. We saw the same observation in the elderly population. Again, no palivizumab-like immunity, but after immunization, a quite robust immunity.

So let's turn to Slide 67 and summarize this. So we've seen populations of decades of repeat RSV infections. They do develop neutralizing antibodies with no -- low to no palivizumab antibodies whatsoever. And this may, we think, be one of the explanations for the limited effect of this odd [ph] immunity for natural infection. The Site II is on the fusion protein. The fusion protein important is critical to the pathophysiology of RSV and this site, especially, is we think is held cryptic during infection, thus not seen by the immune system and thus they do not see antibodies after natural infection.

And so our recombinant F nanoparticle vaccines has induced antibodies to [indiscernible]. So you can see, as I mentioned, we help the adults, some of the childbearing and elderly adults. And this, we think, and the final point here, these antibodies are protective. We've shown this in important relevant cotton rat model, which is an animal model which is a cotton rat, both through active immunization, as well as passive, as Gale described, and I'll touch on that detail in just a minute. We think that as we measure the potency of these antibodies, they look very similar to what we see with palivizumab.

I was just stepping in some of the data. This is Study M201, and this is a complicated study. You can see on the y-axis the fold rise, which would be the extent that antibody is induced after vaccination. So these subjects were immunized at the day 0 and 28. You can see the timing of the days, the days 7, 28 and 20 -- 56, at time points where we evaluated serology. And on the far left, you can see the placebo groups, which, as you'd expect, were unchanged during this trial. And then we also bridged this style with the formulation derived from our Phase I trial and we, again, we think, basically reproduced that data.

And then we evaluated a number of formulations, including the 60 or 90 micrograms of antigen, aluminum or no aluminum, 1 or 2 doses. And we saw, quite clearly, several important points. First, that alum gave us a significant improvement in the immune response. The second immunization and increased dose, the [indiscernible] is same. The point I want to make with this slide, however, is that these are robust immune responses. So heretofore before this trial, we thought that the natural infection induced robust F antibodies that compared to vaccination were really quite weak.

Now what about the quality of these -- the antibodies that we're inducing. So if you go to the next slide, Slide 69, this is what we call concordance analysis. And the point here is to ask if we make SAF antibodies, are they resulting in antibodies that would be functional or considered to be protective? And what you can see on the y-axis is the anti-F IgG antibodies, which would be similar to what you saw in the previous page, just graphed on a long scale, and each dot represents a patient subject 0.

On the x-axis, you can see our palivizumab-like antibody measure. And what you can see there in the red dots are the day 0. So those are people unimmunized, and you can see, they are a very tight cluster and they represent the population that has not been immunized by the vaccine. And you can see that they line up in a line over the palivizumab, which is actually at the end of the. In other words, that population does not explain these type of antibodies.

After immunization, you can see they move up both -- on both axes and move in quite a tight and concordant way. In fact, if you take all subjects immunized by vaccine, either alum or not alum, the concordance slope is 1.08, perfect is 1, significant is 1.25. If you hit [ph] up actually in the alum adjuvant a bit, it's 1.04, so a very strong relationship between the induction of our immune response to anti- F and these palivizumab-like antibodies.

So what do we think these antibodies mean and how are they measured? Slide 70, I am -- I have here the assay we used, it's called the competitive ELISA. And on this assay, the way we measure the activity in immunosera is as follows. We label the palivizumab with a marker, it's case 5-10, and we -- the -- of course, the palivizumab will bind to F proteins, and so it binds in the plate. We can detect that very avidly. Now to measure the amount of activity in our human sera, we mix that together. And if the human sera binds to the Site II on the F protein, it competes with palivizumab, it will displace it. And we can actually measure that and quantitate that very nicely.

So if you go the next slide, I have now again Study M201, women of childbearing age, you see the groups from the left, 60 or 90 micrograms, with or without alum, 1 or 2 doses, and I'd like to take make a couple points here. First of all, if you look at the day 0s here, as I mentioned before, there is very little to no measurable palivizumab-competing antibodies in these subjects after, again, decades of infection. However, after immunization in all groups, we have very robust palivizumab-like antibodies. And if you just look at the first line, 60 micrograms, and given with that twice and you can see, at day 28 after 1 dose, or day 56 at 2 doses, you see 245 or 314.

So what do those numbers mean? We believe through extensive work at MedImmune, showing a level of palivizumab that was protective, that a 25 to 30 microgram per ml, and I would note on this slide here, looks like it -- that cycle has been translated from -- it should be micrograms and not milligrams. But at 25 to 30 microgram per ml, there is a protective -- there is a 2 log reduction on the virus titer in cotton rats. MedImmune used that as guidance for their human trials, and we think this establishes a level of protection that is important. And when you look at our antibody titers post immunization, they're approximately tenfold greater, and 100% of the subjects are achieving very robust palivizumab-like antibodies. So we see this. Again, we've reproduced this in 3 trials, robust palivizumab-like antibodies, and we think they're important indicators of protection.

So now looking at Slide 72, there's a second measure that's been -- of immunity that's been associated with decreased reduction -- decreased risk of hospitalization due to RSV. So this is work actually that Dr. Piedra did at Baylor and his colleagues there. And the way this graph works, this is a -- what is called a reverse cumulative distribution curve. We have on the y-axis a percentage of subjects and on the x-axis, a titer called microneutralization titer. Microneutralization titer is measured by mixing the sera -- the immunosera with viruses that's put on a plate and you look for the reduction of infection in cells.

So what you can see here is that we have the populations at day 0 and placebos clustered together. In green, to the right, we have subjects who were immunized with the non-adjuvanted vaccine; and the red, the adjuvanted vaccine. And there's a few points to be made. If you look at the red line there drawn at the 6, that level has been associated with a decreased risk of hospitalization in 0 epidemiology studies. And every subsequent increase of a log2 titer increase is associated with the 25% increase or decrease in the rate of hospitalization.

And then if you look at the top, after immunization, you can see that we move this whole group to the right and essentially at log28, on the adjuvant group, where 100% of the subject has a titer greater than the log 28. And overall, as a median you see a fourfold increase in the microimmunization titer. So we think this is important. This tells us in the same way that the palivizumab antibodies tells that the vaccine is likely to induce immunity that could be protective when evaluated in randomized clinical trials.

Now turning to our study in the elderly, which we presented, which Dr. Fries presented at ICAAC, I'm just going to touch on this briefly. Slide 73 shows you the anti-F IgG, as we discussed earlier, that's associated with palivizumab response. Again, I think after immunization, we saw quite robust responses.

And then the important, I think, take-home message for this discussion is on Slide 74. Here, you can see, now we're measuring again the palivizumab-like antibody responses. And as I mentioned earlier, in day 0, the placebo groups do not have medical responses. But after immunization, we had quite robust responses, up to 184 microgram per ml, again thinking that the protective level maybe in the 30-microgram range. This looks quite robust and from our standpoint, achieves a goal we have in this trial to show that our vaccine could be immunogenic in this population.

So where are we going with the programs? We are about to start a dose confirmation trial in the context of maternal immunization program and the end of the childbearing age. This will be the last trial in which we will be studying our vaccine formulation in this target population and this will, we believe, will allow us to move into a pregnancy study and this important safety data will support that. We will look at alum, we'll do dose finding, we'll decrease the amount of alum to the minimum required to get the immune response.

We'll also study the antibody kinetics to look, to see at what time during the third trimester pregnancy would be ideal for immunization, such that we induce the antibodies that peak around the third, which would be in general, 37 to 42 weeks of gestation. So that's the time period at which we'd like to have peaked titers from our vaccine. Once we have this data, we will take this and our full data set to CBER, and we hope we will agree to move forward to a pregnancy study in M203 which would start about this time next year. This will be very important for us. First of all, we would show the vaccine's phase and mother infant pairs, following infant through RSV season. And I think very importantly, we'll measure now the transfer of antibodies from the mother to the infant and especially to measure the palivizumab-like antibodies in this population. And our expectation would be that we should see robust antibodies possibly concentrated in the infants from the mothers.

Finally, we will also begin to address the pediatric unmet need. And we'll start safety/immunogenicity trial in 2 to 5 -year-olds and that will be an important start in that population.

I'd like to also make a few brief points about the elderly, if you go to Slide 76. We think it's the elderly -- the RSV vaccine data is being positive, has allowed us to move into a what we call a combination respiratory vaccine. Here what we propose to do is combine the RSV with the seasonal flu vaccine to make a combo. And I have here included some data from the animal trial showing when you mix them together, we can induce very robust palivizumab-like antibodies, as well as flu antibodies that we measure by HAI. And the combination vaccine seems to be very important and this could display the seasonal flu vaccine by having differentiated products.

I did throw in at the end some of the -- there's been a lot of work in the epidemiology of RSV in the elderly, and I just want to fill up that we think is the very important expansion of vaccine coverage for the elderly and high-risk population, adding RSV to a seasonal flu vaccine.

Finally, stepping into upcoming events. We have presented the positive data from the elderly trial M202, we'll see that data in the second quarter of 2014, that would be important trigger for moving into pregnant women. We also next year will start the combination flu vaccine with some data in the -- towards the end of 2014 and we expect to start the RSV trial in pediatrics and look for data towards the end of the year or beginning of 2015.

So we're very confident in our RSV vaccine construct, which is inducing robust response [ph] to immunity. We have measures we think are important and we think the palivizumab story has been a very critical feature of our planning as we think about how to de-risk the program and look for success in this vaccine. And with that I'll close and it back to Stan. Thank you.

Stanley C. Erck

Thanks, Greg. So I just have a couple of slides that I'll walk us through before get into the Q&A session.

On Slide 80, it's just a summary of what you've heard. I won't go into it in detail. I think we've executed well on a lot of vaccine clinical trials. All of the data from the trials, all the trials have produced very good data for us, and I think some of them represent true breakthroughs in our program, specifically with respect to the entire RSV vaccine program and the data we produced on H5N1. I think it's the best published data that we've seen on pandemic influenza. So -- and in addition, I think we have a real opportunity with the flu and RSV combination vaccine. I think you all can imagine that there's not only a very good market opportunity in -- for the RSV vaccine -- RSV portion of this vaccine, but recall that we will become -- we'll be developing a product that will work against 2 leading causes of respiratory infection with flu and RSV in a market, a $3 billion market for flu where there's little product differentiation. We will be trying to develop a vaccine that is completely differentiated from the rest of the industry.

So moving on to Slide 81. Let me just walk you through the coming events. You've heard them all, but this will lay it out in one page. We have a very robust pipeline, and I'm going to talk to you about the coming 18 months, the next 1.5 years development plans starting with the H7N9 trial. I'll just focus on the data -- the data points and there are many that are coming out. We'll have H7N9 data at the beginning of the fourth quarter. We will initiate a large women-of-child-bearing age trial, with data expected by the end of the second quarter of 2014. Similarly, with the seasonal flu, we've got what we assume would be the final phase to the seasonal flu trial, with data coming by the end of the second quarter, in time to have an FDA end-of-Phase II meeting in advance of a -- it could be initiation of a Phase III trial with the combination RSV flu trial. We expect to start that midyear with the data coming in the fourth quarter of 2004. We expect to initiate the Phase III seasonal influenza trial in advance of the Northern Hemisphere season. We will begin the pandemic H7N9 trial that uses our Matrix-M adjuvant in the fourth quarter of next year -- I'm sorry, we'll initiate it in the second quarter of next year or late first quarter, with data coming around the fourth quarter of next year.

And finally, we'll start the third leg of our RSV program with the pediatric RSV Phase I data. These are fairly -- these are long robust list of data points coming out. And before I open it up to questions, I think we can be very certain about these trials that are coming up, at least the timing of them. We have executed well. We expect to do so in the future. What we said into questions about what these -- what the data from these trials will lead to, into either late Phase II or Phase III trials, we can talk to you. We can answer questions about 10 points of the later trials, but we will be more vague about the timing and the size of the trials given that they -- the timing and the size will be driven by the data that we get in the trials I just listed. So with that, I think I'm happy to turn it over to Q&A. Can we open it up, please?


[Operator Instructions] Our first question comes from George Zavoico of MLV & Co.

George B. Zavoico - MLV & Co LLC, Research Division

And congratulations on moving forward as you have -- as you're going to with the RSV. Quick question, you mentioned in the RSV, you're still going with the alum adjuvant. Is there a reason why you're not going to switch to Matrix-M?

Gregory M. Glenn

Yes, I think -- this is Greg. Thanks, George. We have good data with the alum adjuvant. It is not a novel adjuvant, so it's been in multiple-license products -- it's currently in multiple-license products. And we think in this population, with the immunogenicity we're achieving, that we're at sufficient level. And so as we've mentioned earlier, Matrix-M is very suitable for the pandemic for the risk benefit of this -- for the adjuvant is quite high, and that's a suitable place for Matrix-M. So with RSV at this point, we intend to either have alum and some -- maybe some formulations and including consideration of some of the note groups without alum or without any adjuvant as the immunogenicity appears to be quite robust.

George B. Zavoico - MLV & Co LLC, Research Division

Okay. Next question is -- I mean, you've mentioned motavizumab and palivizumab as being second generation. This -- your F antigen is, I presume, is like your first-generation F antigen. Do you see any room for improvements in, say, redesigning the F antigen at all in -- as a nanoparticle? [indiscernible]

Gregory M. Glenn

Yes, I think that -- yes, that's -- those are really important issues. So I think -- well, the point I was trying to make is the F antigen, which we have currently, we've been able to measure palivizumab-like antibodies because they compete for the site II on the F protein the way make it. So we're quite happy with the antigen the way we make it. What -- as we've analyzed the immune responses further, they do appear so -- like -- more like motavizumab. So palivizumab, as you may recall, is a very high affinity monoclonal antigen that defines the site II. Motavizumab was developed through affinity maturation to have a higher binding. And in my view, it was actually better product. And so when we analyzed the immune responses to our F protein and the active immunization protocol, our vaccine performs, in my view, more like motavizumab than palivizumab. So it's a high-binding affinity to the F protein. And we expect -- therefore, I wanted to cite the study of using motavizumab in the term infants because I think it's probably the most analogous of the monoclonal antibodies to our product. So we don't have plans. We're happy with our F antigen as current configuration. We're working heavily on process development, product development, yield, et cetera. And I think, at this point, we've made a breakthrough discovery, frankly, Gale's group has, the way they've modified it to induce this type of activity.

George B. Zavoico - MLV & Co LLC, Research Division

Great. And finally, your timing of your raise couldn't have been better. Here is your best of launch on what it seems to be or appears or will be a rather expensive multi-pronged RSV development program. $80 million plus will fund how much of this program? Is that enough to take it all away to commercialization?

Stanley C. Erck

A good question. No, I think what -- as we've announced and repeated, I guess, is our plan is to stay ahead in the marathon to get multi -- well, RSV vaccine license in 3 different indications is -- I think, the only way we can do that is by controlling the project. And so we're not looking for partnering. We're looking to fund the program in ways that we have our flu program to the extent that we can with non-diluted financing, but it also requires investor participation. This money that we raised is designed to take us into 2016, which will get us a long way on all 3 different programs, and then, we'll see where we go from there.


Our next question comes from Bill Tanner of Lazard.

William Tanner - Lazard Capital Markets LLC, Research Division

Just maybe for Greg and for Dr. Piedra if he's still on. One of the comments that we hear a lot as we talk to investors about the story is the topic of maternal vaccination. And I guess the predominant knee-jerk reaction that we hear is, "Oh the FDA's not going to be enthusiastic about that." But obviously, the FDA does recommend vaccines that are not licensed for maternal use to be used, seasonal flu being one of them. So would just be interested in kind of a general perspectives that -- as you view the dialogue with the FDA what you think the concerns could be theoretically or otherwise, and I have a couple of follow-ups.

Pedro Piedra

Bill, this is Tony. And I would say that 15, 20 years ago, the -- if you raised the same question, there would be an undertone that there would be a huge reluctance to go into maternal immunization for the obvious reasons. But with recent data that have demonstrated the benefits, in part driven by influenza vaccines in third world countries and truly seeing the benefit associated with it, and also with the experience of that have been generated over time with regarding to safety with the variety of different types of vaccines, not only influenza, but the -- acellular tetanus pertussis bacteria vaccine, there has, I think, become a much greater willingness to move forward into that area. And there will always be with, whenever one is breaking any new field, potential for safety discussions and so forth. But I think the benefits that we will have from a maternal immunization program, in particular for RSV, where the vast majority of hospitalization in young children occurs in the first 6 months, first 5 months of life, that there is really a tremendous benefit and that the risk as -- if one moves forward, I think, with these type of vaccines, one would be pleasantly pleased so far that the risk has been very mild and not unexpected with local reactogenicity only.

Louis Fries

This is Lou Fries. I just wanted to mention in response to that question that we have already introduced the concept of our clinical development program to the FDA, outlined our steps of progression into pregnant women, the clinical trials that we planned that have carried out and plan to carry out in nonpregnant women and in parallel with the reproductive toxicity studies in animals. And while Greg was traveling the other day, I had the opportunity to be part of a discussion with CBER as we talked about some details of our upcoming protocol. And they expressed no reservations at all with regard to the pathway that we have laid out to progress through women of child-bearing age and then stepwise into increasing numbers of pregnant women. They indicated that we would likely have an advisory committee somewhere before the pivotal trial, but they had no reservations about our ability to proceed into the pregnant population and that we're enthusiastic and encouraging.

William Tanner - Lazard Capital Markets LLC, Research Division

And then just as it relates to the endpoint for approvability and I appreciate the fact that at it's still very, very early. But if you just think about, obviously, Synagis was approved based on sort of outcomes, but it's passive immunization, so tire really would seem to be not a viable endpoint. I'm just curious if you think about what would potentially be needed for approval specifically in the maternal vaccination as it relates to kids, whether it be a reduction in hospitalization or as a correlate would it be possible to show what the pelvis of anti-F [ph] antibody titer is and just go with that? And I -- asking to speculate but...

Stanley C. Erck

That's okay. I'll take the big first stab, and I'll let maybe Tony and Lou jump in. But we don't -- when we're looking at these palivizumab and motavizumab-like measures, we don't expect them to supplant the need to randomize controlled endpoint trial. So that's our expectation. It just gives us confidence as we plan to move into the trial that we're seeing the kind of antibodies that we expect to be protective. So that's point one. It is the major de-risking of the program, a novel, a unique set of information for new vaccine to have this level of immunogenicity that we think is meaningful. Five randomized clinical trials of cotton -- animal model we think is relevant. So we have a lot of data to give us confidence in the program, but we do expect to a randomized clinical trial showing efficacy. On that note, I would say the syndrome here is not a subtle one in children. So in infants, bronchiolitis is quite prominent. It's pretty easy to diagnose, pediatricians can take the diagnosis at the doorway almost during the season. So coming up with the endpoints for RSV, PCR-positive RSV bronchiolitis will be, I think, relatively straightforward. And maybe I can ask Tony to comment on that. But if you look at the motavizumab trial, it has significant effects. As I've mentioned 83% reduction in hospitalization, so that's at one level. One could also look at medically attended respiratory illness, office visits, ER visits and include that as part of your population against what you're trying to -- protect them from RSV. And maybe I could ask Tony to make any other comments on that. If you would, please.

Pedro Piedra

From a maternal immunization perspective, I think the pediatricians would expect that there will be a reduction in RSV-related hospitalization and that would be the primary outcome measure. There, as Greg talked about, I think there are other secondary outcome measures that will be relevant and that's reduction of overall illness burden, in particular outpatient disease. But I think from a truly maternal immunization strategy, you need to be able to reduce hospitalization. With regards to kind of immune correlate, I think, during that time, with your pivotal Phase III trial, it would be very worthy to establish a new correlate that one can later on see how it applies in future studies.

William Tanner - Lazard Capital Markets LLC, Research Division

Okay. Great. And then maybe just the last question as it relates to the combination vaccine. I mean, Stan, if you think about it, is it possible to combine the RSV and the seasonal flu? Is it possible do you think commercially that you'd still be able to get a bit of a premium for the seasonal flu component relative to the existing vaccines, thinking that maybe the company has an offering that is RSV vaccine alone or RSV vaccine alone with the seasonal and would somebody just say, "I'll just do the RSV and existing seasonal flu?" Do you think there's an opportunity there to actually have 1 plus 1 equals 3 maybe?

Gregory M. Glenn

There are details there that we have not sorted through I think as far as the detail -- the pricing of each individual product. I think that we're not going -- we're planning right now on having an RSV vaccine for the elderly alone. I think it's planned on being a combination vaccine so the pricing will be combination, and I think it will reflect the -- it will reflect the vaccine's ability to reduce incidents of disease and be priced accordingly.


Our next question comes from Ted Tenthoff from Piper Jaffray.

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

Thanks for hosting this webcast today. I think this is a really good opportunity to catch us up on a lot of data you guys have been reporting over the last 18-plus months and really kind of putting in perspective the development plans going forward. I guess one has to do with this idea around the pediatric RSV opportunity to start, I guess, about a little over a year from now. And sort of safety hurdle there, we talked about the safety issues with respect to immunizing mothers, but what are the hurdles -- or what would you need to do before starting that Phase I PEAK study? And is there a higher bar than kind of what do you have to do before you can start that study and what does that look like?

Gregory M. Glenn

Well, this is Greg here. I'll take a first step and I'll let Lou and Tony chime in. So we believe with a lot of the work we've done to date in the healthy population with our vaccine, with our formulation, generating safety data, et cetera, would have been an important precursor for entering into the pediatric population. And I think overview today is that we are -- at the end of this women of childbearing age trial, we'll make a dose selection based on the safety immunogenicity we see from moving into that population. And their -- when you look at pediatrics, the way we've divided up our target markets, our target product profile, maternal immunization for the early infants, maybe up to 6 months of age, depending on what we see in terms of the immunogenicity, in 6 months to 6 years where we see a need, as Dr. Piedra has outlined. And there, our considerations would be, "Would it be a seasonal vaccine? Would it be part of routine pediatric vaccine?" And today, we're sort of considering this as potentially a seasonal vaccine. So in that population, 6 months to 6 years, we see that there is a historical development of vaccine that's very important to take into account. So in the 1960s, there were trials done with the formalin inactivated whole virus vaccine. And in that setting, there were some adverse events in the population that was quite young and generally considered to be what we call seronegative. And so that population is a population with a safety bar for inter-clinic development that's higher. For 2 to 5 year olds, where Dr. Piedra has had considerable experience with the -- candidate our c [ph] vaccine are generally what we call seropositive. In other words, you can measure the presence of neutralizing antibodies from infection. They are at low risk for disease exacerbation. So we are proposing to start our program in that population, 2 to 5 year old, and that would be the driver for that. And one of the considerations in which we'll get advice for would be, "Could we take the 2 to 5-year-old vaccine to licensure first and begin to develop safety information on the younger population or should we begin to develop the Phase -- the data in that younger population of our vaccine?" I would say one last comment, and then I'll turn it maybe to Tony to also comment. The preclinical model, the cotton rat is quite predictive. And as Gale mentioned, we have been able to obtain the original lot that says -- called Lot 100 that was involved in this adverse outcome and we can model the cotton rat and it predictably produces the same type of pathology that we think was observed in that clinical trial. There was some seminal work done by Brian Murphy from the NIH to show that, that vaccine was not inducing functional responses, so while you can induce immune response with the formalin activated vaccine, you couldn't measure important immunity. We've been able to reproduce that data so we showed that formulated -- formalin-activated vaccine induces immunity that does not induce neutralizaiton antibodies, and interestingly, does not induce palivizumab antibodies. And you could see that in our slide deck in Gale's slide. It's a very important precursor safety study for getting into this population. And maybe Dr. Piedra, I don't know if you want to make any more comments on that question.

Pedro Piedra

As a pediatrician, we tend to be conservative as a group. And so the first thing that we will tell you is do no harm and so it will be very important with reasonable size numbers and those are being generated to show the safety associated with the vaccine. And as we have seen it to date, it has a very safe profile and expect that reactogenicity profile that would, in my mind, be no different from an inactivated influenza vaccine. Second concept will be that if we're going to go into pediatrics, we need to think that there's going to be a potential benefit or otherwise the risk-versus-benefit ratio really changes. And from here, we have, what I would say, very supportive data, in particular in animal models and also a proof of concept with palivizumab, that if you have the right type of antibodies, you would expect to see benefit from it. And so I think that's what is being achieved to date. And so there's a lot of preliminary information that is going to be very useful that have been developed and it's -- continues to be developed before we go into the pediatric population. And then the third that we have to handle is the issue of the vaccine-enhanced disease. And if we look at past the initial studies that were done in the 1960s, we know that vaccine-enhanced disease really occurred primarily in children under 2 years of age, and we assume that they were seronegative. And so I myself have done a number of studies with the purified fusion protein vaccine, not here from Novavax, but many years ago from practice and later Wyeth. And we demonstrated that these vaccines were very safe in young children and we even did multicenter trials in children with cystic fibrosis 1 year of age and older who were shown to be seropositive. And so we have demonstrated in the past that you can take these type of subunit or nanoparticles vaccines into the pediatric population and use a conservative approach to ensure that we're going to have really an appropriate outcome when we study these type of vaccines in children.

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

This also explains why you're taking the time before beginning that study, so that's a really helpful answer, and that's really interesting work with the cotton rat with the original lot. Sorry, did I cut someone off?

Stanley C. Erck

No, it's just me. So we're scheduled -- this is scheduled to end at 11. I think we'll take one more question and conclude.


Our final question comes from Greg Wade of Wedbush.

Gregory R. Wade - Wedbush Securities Inc., Research Division

And perhaps can you help us understand the elderly seasonal flu RSV vaccine combination? I guess if you co-formulate the flu and the RSV, you might be able to get away from the utilization of adjuvant. But the antigenicity of seasonal flu vaccines can vary year to year and that might help or hurt in terms of getting the right response to RSV. So how are you thinking about that product with respect to the inclusion of adjuvant? And then will the RSV component be constant or will it vary year-to-year? And what surveillance mechanisms are in place to tell you what to make on an annual basis?

Stanley C. Erck

Well, that's not just 1 question, is it? So Greg, let's see who wants to answer?

Gale E. Smith

Okay. I think we can -- first of all, the RSV. I think we can -- that issue has been addressed by Greg. As you recall, he pointed out the relative in-variance of the RSV F protein as opposed the RSV G protein. So we don't anticipate the RSV antigen changing either in the construct or in the dose of it from year-to-year. Now of course, immunogenicity of influenza antigens does change somewhat from year-to-year. Some are better than others. In general, we have found that when we coform that with just an animal data, not unless we coformulate the 2, we have a very good response to both components. And frankly, that's even in the absence of the aluminum adjuvant. And so one of the things we will examine as we go forward is whether the aluminum adjuvant is additive. It would be by far the simplest if we didn't have to use it, but that's one of the things we will explore in upcoming studies to determine exactly the best formulation of the combination. But no, the RSV antigen won't change. And secondly, we have a hint of some animal data that the influenza antigens collectively do a little better in the presence of the RSV F. So we find that very exciting. Those are formulation questions that will ultimately be answered in the first couple of clinical trials with the combo vaccine.

Stanley C. Erck

There are is some other evidence and so in terms of giving the RSV annually, we know from one of an investigator named, Ann Falsey, they've looked at the RSV F response to natural infection and they kind of go up and down over the 12-month period. So in the elderly population, where there's some relative immune senescence, I think, it's reasonable to expect that we immunize on an annual basis because immune response is going to go up and down. And here, we believe that, that usually with viral infections, the more robust immunity more likely are they have protection and robust protection. But it is a question that we will examine as we go forward to look at the duration of immunity and how that might relate to a seasonal vaccine.

Okay, good. Thanks everybody for tuning in. We look forward to reporting the results of all these trials we're planning. That includes our Investor Day. Thank you.


Ladies and gentlemen, this does conclude today's conference. You may all disconnect and have a wonderful day.

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