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Executives

Alan Engbring – Executive Director, Investor Relations

Vijay Samant – President and Chief Executive Officer

Jill Broadfoot – Chief Financial Officer

Analysts

George Farmer – Canaccord

Nathan Cali – Noble Financial

Reni Benjamin – Rodman & Renshaw

Nicholas Bishop – Cowen & Co.

Boris Peaker – Oppenheimer

Vical Incorporated (VICL) Q3 2011 Earnings Conference Call November 1, 2011 12:00 PM ET

Operator

Good day. Welcome, ladies and gentlemen, to the Vical Incorporated Financial Results Conference Call. At this time, I would like to inform you that the conference is being recorded, and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers from the invited participants after the presentation.

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

Alan Engbring – Executive Director, Investor Relations

Hello, everyone. Welcome to our third quarter 2011 financial results conference call. Participating on the call today are Vical’s President and Chief Executive Officer, Mr. Vijay Samant; and Vical’s Chief Financial Officer, Ms. Jill Broadfoot. I will begin with a brief notice concerning projections and forecasts.

This call includes forward-looking statements, including financial expectations, and projections of progress in our research and development programs that are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks set forth in Vical’s annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, as well as the specific risks and uncertainties noted in Vical’s news release on third quarter 2011 financial results. These forward-looking statements represent the company’s judgment as of today. The company disclaims, however, any intent or obligation to update these forward-looking statements.

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

Vijay Samant – President and Chief Executive Officer

Thank you, Alan, and welcome. We have made terrific progress in our key development programs during the third quarter and the momentum is continuing as we approach year-end. I’ll provide an update on these programs today, but first let me pass on to our CFO, Jill Broadfoot, who’ll start the call with a review of our third quarter financial results.

Jill Broadfoot – Chief Financial Officer

Thank you, Vijay. Our TransVax license agreement with Astellas drove financial results for the third quarter and is expected to have a continued impact. As we reported earlier today, third quarter 2011 revenues were $26.6 million, compared with $2.3 million for the third quarter of 2010, which was primarily a result of the initial upfront payment recognized under the TransVax license. With relatively flat operating expenses quarter-over-quarter, the increase in revenues resulted in a net income of $16.4 million for the third quarter of 2011 compared with a net loss of $6.8 million for the third quarter last year. We ended the third quarter with cash and investments of approximately $62 million and we expect to end the year with cash and investments of $53 million to $56 million.

As we advance through the development of TransVax over the next few years, we expect to receive ongoing reimbursement by Astellas of our costs for TransVax related activities, which should offset a portion of our operating expenses. We will provide net cash burn guidance for 2012 when we announce year-end 2011 financial results in February.

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

Vijay Samant – President and Chief Executive Officer

Thank you, Jill. I’ll start today with our lead program, Allovectin for metastatic melanoma. As we approach completion of our pivotal trial, the excitement around this novel immunotherapy is increasing and we are starting to get frequent questions on some common topics in our one-on-one sessions or our face-to-face presentations. I wanted to take this opportunity today to address some of those questions in the single forum so everybody has the same answers.

The first question is what is the efficacy potential of Allovectin. Let me remind you that in our Phase II trial we focused on two efficacy endpoints, response rate and survival. We had 15 responders out of 127 patients for an overall response rate of about 12%. The median duration of response was 13.8 months. Overall survival in our Phase II trial was 18.8 months compared to a typical chemotherapy survival range of 6 to 11 months.

So our numbers look good in Phase II, but let me explain why we expect our results in Phase III to be even better. First, we wanted to select patients in our Phase III trial who had the best chance of living long enough for Allovectin-7 to work. Chemotherapy takes a toll on overall health and especially in the immune system, so chemo-naïve patients have a healthier constitution. In our Phase II trial, the majority of our responders were chemo-naïve. In fact, patients who were chemo-naïve had a response rate almost twice the rate as patients who had prior chemotherapy. So Allovectin simply works better in chemo-naïve patients. We have, therefore, enrolled only chemo-naïve patients in Phase III.

We have also enrolled healthier patients with no brain or liver mets and normal LDH, which should help us. To our knowledge, we are the first company to use LDH as a marker for recruitment in a melanoma trial. In addition, we measured LDH at our central lab to eliminate side-to-side variability in testing. For patients in our Phase II trial who met all the Phase III eligibility criteria, the response rate could have been about 17%.

In summary, by following the specific inclusion and exclusion criteria we are narrowing the very heterogeneous overall in melanoma population and selecting a very homogeneous group of patients most likely to respond to Allovectin. Second, we wanted to keep these patients in Phase III trial on Allovectin long enough for it to work. Under standard RECIST criteria, patients must be withdrawn from the study if they develop any new lesions, even small clinically irrelevant lesions. We lost almost 62% of the patients in our Phase II trial due to withdrawals during the first 8-week of the cycle of treatment.

In Phase III, we have modified the RECIST criteria under an SP agreement. That allows the patients to remain on study through at least two cycles or 16 weeks even if they develop new lesions as long as their physician assesses that the treatment was providing clinical benefit. In addition, we have demonstrated a strong positive correlation with Allovectin between response and survival. Despite the high drop-out rate during the first cycle of treatment, our overall median survival in Phase II was an impressive 18.8 months. For responders, it was an even impressive 22.5 months. If we can increase the response rate, we should also have a corresponding impact on survival. So we believe the potential for achieving the efficacy goals of Allovectin is excellent.

The second common question is why do you inject a single lesion? Cancer cells can grow and replicate only if they can successfully evade the immune system. One way they do this is by changing the way tumor-specific antigens are displaced in the cancer cell surface. Allovectin has multiple mechanisms that work together. The repeated injection of cationic lipid complex draws the immune system resources to the tumor, that’s the first step. The HLA-B7 antigen makes the tumor look like a foreign tissue to the immune system and the beta-2 microglobulin restores the normal display of tumor-specific antigens. The result is that T-cells can then find and destroy similar tumor cells throughout the body. So, Allovectin works by breaking the immune system’s tolerance for the melanoma cancer cells. We inject the same lesion repeatedly to keep the immune system focused on a single lesion until the tolerance is broken. Some patients respond more quickly than others. So we try to keep all the patients on treatment long enough to break this tolerance that I just mentioned.

We have designed the trial to keep as many patients as possible on treatment through at least week 16, that’s four months guys. We have tested the concept of single versus multiple lesion injection in our Phase II trial and found that the single-lesion injections indeed worked best.

The third common question is what evidence do we have that Allovectin provide a systemic effect? In Phase II study, we have documented in multiple patients that un-injected tumors responded to the treatment, in several cases even completely disappearing from the distant parts of the body. So, for example, injection into lesion on the arm can cause immune system to destroy the tumor in the lung. We also documented cases of vitiligo among the responding patients. Vitiligo is a condition that appears as light patches on the skin. It’s caused by the immune systems attack on the melanocytes, the pigment baring cells of the skin which are the same cells affected by melanoma. So vitiligo provides a clear evidence of systemic immune effect.

The fourth common question is what is the safety profile of Allovectin-7? Of the 127 patients in high-dose Phase II trial, we had zero patients withdraw from the study because of side effects. With typical melanoma treatments withdrawal rates due to side effects can be 10% or more. We also had zero, and I repeat, zero grade 3 or 4 drug-related adverse events. This is an exceptional result as typical melanoma treatments cause grade 3 or 4 adverse events in 10% to 15% of the patients, and even caused deaths in 1% to 2% of the patients. We are highly encouraged by the excellent tolerability of Allovectin-7 demonstrated in the high-dose trial. We have completed multiple interim safety reviews in the Phase II trial without any issues.

The fifth common question is can you summarize what have you done to improve the chances of success in the Phase III trial? First, as I mentioned earlier, we need to enroll the right patients - those who can live long enough to benefit from our treatment as in Phase II. We are enrolling patients with stage 3 or 4 metastatic melanoma with no brain or liver mets. As in Phase II, we are enrolling only patients with normal or better LDH, which is a good indicator of the overall patient health. Unlike Phase II, we are only enrolling chemo-naïve patients in Phase III because they are more likely to respond to Allovectin.

Second, also as I mentioned earlier, we need to keep patients in study long enough for Allovectin-7 to break the immune system’s tolerance. We are doing that in Phase III by modifying the RECIST criteria to allow patients to remain on study through at least two cycles or 16 weeks or four months of their treatment and at their physician’s discretion of course. So we optimized the design of our Phase III trial to highlight the long-term response and survival characteristics of immunotherapy where chemotherapy has demonstrated historically poor results.

And the final question, if approved, how might Allovectin be used in the marketplace? Let me begin that despite the encouraging advancement approval of multiple new treatments for metastatic melanoma, for most people there is still no cure. That means patients were likely to pursue new treatments to find what works best for them. The unique mechanism of Allovectin and its excellent safety profile should make it an attractive component of such combinations.

During the third quarter, we also presented results from a study in an accepted melanoma mouse model combining Allovectin with an anti-CTLA-4 antibody which is used – which is the mouse equivalent of Yervoy. Highlights of this study included the following: combinations of the two treatments provided a synergistic reduction of tumor growth compared with either treatment alone. The benefits of combination therapy became evident about 12 days after the treatment initiation, suggesting a possible two-step process in which Allovectin first direct T-cells to the target melanoma tumor and the anti-CTLA-4 antibody then maximally activates these T-cells. The combination provide a positive trend in survival compared to either treatment alone. Allovectin alone significantly reduced tumor growth and significantly increased survival time compared with the anti-CTLA-4 antibody alone and compared with no treatment or treatment with placebo. We look forward to exploring additional combinations in clinical studies after approval.

Allovectin’s safety profile should also make it attractive to older patients who cannot tolerate the side effects of other proved treatments. The median age of patients in our Phase II trial was 60 and the range was up to 98. Once we have the efficacy and safety data from Phase III, we should be better able to establish commercialization specifics. We are obviously working on those.

I complete my discussion on Allovectin by reviewing the timeline as updated last quarter. We expect to complete treatment and follow-up for the primary endpoint, which is response rate by Feb of 2012, and to continue monitoring for the secondary endpoint overall survival up to the release of top line data, which we expect to occur in the second quarter of 2012. I’ll note today that we’ve completed a planned sweep of sites to bring the survival database as up to date as possible, and after that sweep we’re still lagging in the expected death event rate for the study. Since we provided all the details around this timeline in our last call, I won’t repeat them today, but will be happy to answer any questions. We’ll confirm the update and the guidance as needed in our call next Feb.

Let me now move on to TransVax. We announced the TransVax license agreement with Astellas early in the third quarter and drew the details in our last call. Since then we have collected initial upfront payment of $25 million and finalization of the Phase III trial design will trigger another $10 million payment. We have made significant progress in collaboration with Astellas and remain on track for the planned initiation of a Phase III trial in the first half of 2012, and a Phase II trial for solid organ transplant recipients is also expected to begin again in the same timeframe.

Let me now move to Herpes Simplex 2 program. This is the therapeutic vaccine for Herpes simplex 2 represents the large potential market opportunity which have conservatively estimated at more than $1 billion. The prevalence in the U.S. alone is estimated to around 15 million people, with about 20 million or 10 million people suffering from period outbreaks of general wards. The other 80% are asymptomatic, but can still shed virus and transmitted to their sexual partners. Since our last call, we presented new data at scientific conference from our latest studies of our therapeutic vaccine and standard guinea pig herpes model.

Our Vaxfectin formulated vaccine against HSV to provide a complete protection in guinea pigs against both primary and recurrent HSV-2 disease. The vaccines also significantly reduced genital lesion recurrence and viral shedding as well as latent infection in the central nervous system. Collective results from our pre-clinical studies include the following.

Prophylactic vaccines encoding glycoprotein D plus or minus, two herpes virus tegument proteins provided complete protection from both primary and recurrent disease; the prophylactic vaccines also significantly reduced viral replication at primary infection site as well as detectable virus at the latent site; therapeutic vaccines encoding glycoprotein D plus, the two tegument protein significantly reduce the frequency of general lesion outbreaks in animals with pre-established HSV to infections; the therapeutic vaccines also significantly reduced the frequency of general viral shedding. These are superb results and we are working now to complete preclinical development and prepare our plan to advance the therapeutic vaccine into human clinical testing. We believe a relatively small and quick Phase I, II study should be conducted in infected volunteers to provide initial human safety and proof-of-concept data. The program is high on our priority list and we look forward to defining a path forward in the near future.

We expect continued progress on our independent and partnered programs through the year-end 2012 into 2012. In our Phase III trial for Allovectin, we expect to complete treatment and follow-up for the primary endpoint by Feb of 2012, that’s a two-year follow-up, and to release top line data from both primary and secondary endpoints in the second quarter of 2012. In our TransVax CMV vaccine program, we expect Astellas to initiate a Phase III trial in stem-cell transplant recipients and a Phase II trial in solid organ transplant recipients in the first half of 2012. Our Japanese partner, AnGes, has recently updated its guidance and now expect to initiate a multinational Phase III clinical trial of its Collategene angiogenesis product in 2012. We expect to end the year with cash and investments of $53 million to $56 million.

This concludes our prepared comments. Operator, we are now ready to open the call to questions from our invited participants.

Question-and-Answer Session

Operator

Thank you, Mr. Samant. The question-and-answer session will begin at this time. (Operator Instructions) We’ll go first to George Farmer from Canaccord.

George Farmer – Canaccord

Hi, good afternoon. Thanks for taking my questions. Hey, Vijay, can you – do you have any evidence as to how many patients, if any, in either the Phase II or the Phase III trial went on to subsequent Yervoy therapy after disease progression?

Vijay Samant

All right, let me walk through. First of all, in Phase II, -- I spent almost seven plus years now, there was no Yervoy in existence at that time. It was partly in a preclinical state, so, to our knowledge none, because the study was completed very long time ago. Let’s talk about our Phase III study. Okay? When our Phase III study was conducted, obviously the frontline therapy for Yervoy was been conducted. The second line therapy for Yervoy was been conducted. And also the Roche-Plexxikon drug front-line therapy was also been conducted in the same time. Our study started in Jan of 2007, approximately. Okay? Both those frontline studies for the Roche drug and Yervoy required treatment in eye patients. So, during the conduct of those studies neither of our patients, in either of the arms, the chemo arm or the Allovectin’s arm, would progress couldn’t enter those studies because they were for treatment – patients, got it.

George Farmer – Canaccord

Yes.

Vijay Samant

So the first time anybody could have got Yervoy in the United States was – is some time in the April-May timeframe when it was formally approved. And then in Europe much later is approved a second line therapy and you just heard about the knees issue, so I don’t know what – how widespread usage is. So it was allowed in the April-September timeframe, that’s four years after the start of our study.

George Farmer – Canaccord

Okay. I saw it Vijay. I thought that the Yervoy entry criteria just stipulated that patients had to be chemo-naïve?

Vijay Samant

No, treatment-naïve. Look up the New England Journal of Medicine article, okay. I will send you the article. Both the studies, both the Roche, Plexxikon drug was treatment naïve and their study was treatment-naïve.

George Farmer – Canaccord

Okay.

Vijay Samant

And the second-line therapy for Yervoy, which was for chemo-refractory patients had a specific clause that patients who are involved in other studies bare with survival with the end point were not eligible to enter in those studies. So neither of our chemotherapy drug or the Allovectin arm from our study could have gotten in till after these drugs were approved and those drugs were approved in April in the United States, September/October in Europe. In fact, the Yervoy is only approved second-line therapy in Europe. So that’s four years after our study started. Remember our last patient was recruited in the study in Feb 2010. That means these drugs were approved almost 15 months after our last patient was recruited.

George Farmer – Canaccord

Okay.

Vijay Samant

And if you assume, let me finish, now you got me going here. Now if you assume that the chemo patients die very quickly in the chemotherapy arm and our study started in Jan 2007, so a lot of our patients had progressed way before these drugs got approved and went on to other therapies, okay. We don’t have specific patient-by-patient determination who got what.

George Farmer – Canaccord

Okay.

Vijay Samant

Does that answer your question?

George Farmer – Canaccord

Yes, thanks. And regarding your timelines, you mentioned that the OS event rate was lagging behind your expectations. Is it possible you could un-blind the trial and just give us a response rate data while keeping the OS data blinded?

Vijay Samant

No. I don’t think that’s what’s in the plans right now because remember, we – our two-year follow-up on the response rate data completes in Feb of 2012, then we need a couple of months to clean up the data, then we had to adjudicate it. And that kind of brings you – the adjudicated data is what you guys want to hear about it and that brings you towards the end of second quarter and we hope that that point in time we’ll have the survival data also. And hence, we will announce them at – both them at the same time. There’s really no – there is no upside of announcing either of the data independently because it leaves a lot of questions open, okay. And plus, you don’t want anybody to accuse us that we – by announcing data either way that it’s influencing our ability to wait longer for the survival data. So we are going to be blinded from the data ourselves, that’s our goal.

George Farmer – Canaccord

Okay. So you can still provide us OS data prior to hitting any – the requisite number of events, that’s the…?

Vijay Samant

No, no, no, no. We will wait for requisite number of events. We will not…

George Farmer – Canaccord

Okay.

Vijay Samant

We will not un-blind the data until the requisite events. And we’ll give you an idea in our Feb call because, though we are lagging behind, you don’t know maybe it will catch up. And if it doesn’t catch up, then we’ll have to give you a revised guidance at that point in time, but…

George Farmer – Canaccord

Okay, all right. Very good. One more quick question before I hop back do you have to prove to FDA that you are demonstrating expression of HLA-B7 or beta-2 microglobulin at all? Is that required?

Vijay Samant

We have done a lot of preclinical studies before in animal models where we have demonstrated the expression levels that (indiscernible). We have – tumor aspirants, we’ll be doing a mechanism study, but the FDA is not requiring it. But the mechanism study always helps, okay. So we have – we’ll be running all kinds of panels on the blood work of the patients are (indiscernible).

George Farmer – Canaccord

Okay, thanks very much.

Operator

We’ll go next to Nathan Cali from Noble Financial.

Nathan Cali – Noble Financial

Hey, guys. Thanks for taking the questions today. Just a quick question on the patient group in the Phase III study, you indicated that the overall survival for these patients is 7 to 11 months. Would it be that the profile of these patients being a healthier profile without the HDL – liver mets and so forth compared to the Phase II would have a higher rate of survival on average? Could you just talk about that a little bit?

Vijay Samant

We don’t know, right. If you look at all the – this was a full disclosure of what data is out there. But if you look, majority of the literature, it’s between about 8 and 9 months, okay. I think it’s – I don’t know whether it’s a (indiscernible) study. I can send you the recently published data. We believe that eight or nine months is what chemo gets and you would add about two plus months to, it will be an 11-month range for the kind of patients we are treating with. That’s our guess, but that’s the assumption that we have made in our statistical calculations for our survival endpoint. But there is no specific data available for our patient population.

Nathan Cali – Noble Financial

Okay, thanks for taking the question.

Vijay Samant

Thank you, Nathan.

Operator

We’ll go next to Reni Benjamin from Rodman & Renshaw.

Reni Benjamin – Rodman & Renshaw

Hi, good morning guys. Thanks for taking the questions and congratulations on the progress. Just a couple of quick questions, one is can you talk to us a little bit about the release specs for Allovectin? Is there a immunogenicity assay that’s in place and just kind of maybe just talk a little bit about what that is?

Vijay Samant

There’s always a potency assay to make sure, what is known as the expression assay, okay, to make sure that the genes that you are encoding are actually expressed, okay. It’s a cell-based assay that we’ve been doing for a number of years to make sure the (indiscernible) is potent. So…

Reni Benjamin – Rodman & Renshaw

And has the – have you ever encountered an issue where you’ve had to throw away batches or where the process that you gone through just getting back things that aren’t as potent and do you have any idea of what that percentage might be?

Vijay Samant

I think – let me explain to you that first of all that’s one of the beauty of plasmid manufacturing of its reproducibility, okay. The lots are reproducible from lot to lot. We have not had any problems to my knowledge of us throwing out a lot. We don’t cherry-pick lots or anything like that if that’s what your question is. The potency assay has always worked the expression of the plasmids in the transgene is a matter of routine, okay.

Reni Benjamin – Rodman & Renshaw

Got it, okay. And just very quickly, for TransVax, have you gotten any more detail regarding what the design of the Phase III might be and how either for the transplant patients or the solid organs, how – what the design would be and how long it could take?

Vijay Samant

I think all I can tell you at this stage is that we are very intimately involved in active discussions with the agency in these weeks as we are talking right now. And anything I would say would undermine the tone of our conversation, which has been very collaborative and productive at this stage.

Reni Benjamin – Rodman & Renshaw

Okay. And then just one final question, any progress or just thoughts on next steps for the influenza program?

Vijay Samant

Well, I mean you – I don’t know whether you saw the article in The New York Times magazine section over the weekend on the Anthrax program, I don’t know whether you – if you have not read, it is an interesting article that you want to get. And also Forbes there’s an article on the Anthrax program talking about companies who are dependent on government contribution to take a flu program or an Anthrax going forward. That’s not a win-win situation for a company where investors are putting money because really there’s no much money in the flu business. And the only money in the flu business is if you can develop a vaccine where you can demonstrate efficacy which is superior to the existing vaccines in people who are age 60 and older. The problem is there’s no regulatory pathway of doing it. And until there’s such a regulatory pathway defined by the agency, we’re not going to put our shareholders’ money in jumping in a generic flu business market because nor are we going after BARDA money or Department of Defense money because it’s a loss proposition.

Reni Benjamin – Rodman & Renshaw

So, just – I mean we shouldn’t be expecting anything more from this program? It seems – develop…

Vijay Samant

Unless there is a big outbreak of bird flu or something and the government decides they want to really now engage in new technologies and take the risk on their own mantle as opposed to companies taking the risk, I don’t think as expressive time the program will be status quo. But remember, one of the goals of us doing the program was simply allowing us to get real human experience in two clinical trials with TransVax and (indiscernible) adjuvant to make sure it’s safe, well tolerated, and that it enhances the expression levels that we see in humans, and that we have accomplished.

Reni Benjamin – Rodman & Renshaw

Okay. And just I guess one last question for (indiscernible) and clearly the – we have heard some very good news out there regarding GSKs malaria vaccine, any thoughts regarding partnering or moving that vaccine into much bigger indications?

Vijay Samant

The answer to that question is, yes. We are working with a number of people right now but it’s a – as it turns out, every new company that wants to work on it wants to make sure it works in their models in a long-term study better than the mouse trap that they have tested it again, then this takes a long time. Okay? The development – but one of these days this is going to come to -- I have always been saying that people have forgotten that this could be a very important value driver for the company. Having said that adjutants are not approved. It’s the product that’s approved. So, (indiscernible) cannot be approved on its own. It has to be approved in the combination with an antigen.

Reni Benjamin – Rodman & Renshaw

Right, right, okay. Great. Thank you very much, and good luck.

Vijay Samant

Thanks, Reni.

Operator

We’ll go next to Nicholas Bishop from Cowen & Co.

Nicholas Bishop – Cowen & Co.

Thanks for taking my question. Mine is about R&D looking forward. You have had some time now to digest revised financial position to the new partnership and I was wondering if you have any commentary on what your R&D plans in 2012 might be? You mentioned potentially an early clinical trial HSV-2, is that what we should be thinking about or are there other programs you might work on?

Vijay Samant

We have three choices which I have outlined and we haven’t actually formally decided which one we’re going to take, but we’re leaning towards HSV-2 obviously because the data is pretty spectacular, but CyMVectin is another program which we are examining very carefully and debating internally because the advantage of CyMVectin obviously is what – we have an IND approved ready to go, but with HSV we will have to do more preclinical work to get that IND filed and get approved. So there are timing issues. However, the trial is a much more complex trial, so we need to make sure that the target endpoints are properly defined. But as HSV-2, the endpoints are much easily achievable or whether they are achievable but they can be easily demonstrated. The third option that we have is really embarking and taking an early risk and moving into head and neck cancer with Allovectin which we have done early studies which have shown some early inkling of efficacy and we can quickly go into the clinic with a program like that. So those are the three programs we’re looking at. And we hopefully, in the coming months, will tell you what our pathway is, but it’s an excellent question.

Nicholas Bishop – Cowen & Co.

Okay. And then one – second question I guess, financially, about the remaining milestones you have prior to commercial launch with that Astellas partnership, the 95 million or so potential milestones. Just kind of for modeling purposes, I wonder if you could give a little color on what events might lead to your realizing those milestones. For example, if TransVax were to be approved by the FDA between now and then, about what fraction of those milestones might you achieve would you expect?

Vijay Samant

Well, it’s a great question, but some of those milestones as to when they occur are enacted from our SEC filed agreements. But logically these milestones are spread over a variety of events such as regulatory filing, regulatory approval. Those are the kinds of those milestones are. So it would be unfair to give granularity because of our confidential relationship with Astellas on those matters, okay. So you need to make some judgment calls on those, okay.

Nicholas Bishop – Cowen & Co.

Okay. Fair enough. Thank you very much.

Operator

We’ll go next to Boris Peaker from Oppenheimer.

Boris Peaker – Oppenheimer

Hello. I just wanted to ask a question on – from a commercial perspective on Allovectin-7. Specifically if we look at your Phase III recruiting criteria, how do you believe that might impact the label particularly the brain and liver mets contraindication?

Vijay Samant

Obviously the label would exclude patients with brain mets and liver mets when it’s initially approved unless we decide later on to go and do a small study which includes brain mets and liver mets whether it’s a Phase II study and show that this drug indeed can make some impact on its own and in combination with another drug. But the label definitely would include brain mets and liver mets patients, okay. Go ahead.

Boris Peaker – Oppenheimer

No, I just wanted to follow up in terms of epidemiology of melanoma that what fraction of patients would that exclude?

Vijay Samant

I would say that it – of all the melanoma patients, about 30 to 35 patients would have characteristics outlined in our study, okay. Let me go the other way, so about 65% of the patients would be excluded.

Boris Peaker – Oppenheimer

Okay, got it.

Vijay Samant

But still a huge number.

Boris Peaker – Oppenheimer

Got it. And in terms of clinical practice, do you think physicians would inject only one lesion or multiple lesions and do you anticipate that to be a single-lesion injection to be part of (indiscernible) requirement as well?

Vijay Samant

I think so, it will be. And I think physicians prefer to inject single lesion because it takes the guesswork out, because remember it’s a 2-milligram 1 ml dose. If they’re going to start splitting injection between multiple lesions, you really have no idea what you’re going to inject in each lesions, okay. And if you start injecting more than 2 milligrams in multiple lesions, then you’re going to pay a lot more money. So they really – the physicians generally like to pick a easily injectible target lesion which they can access very easily and inject that. So I don’t think, to my knowledge, unless we do a study to demonstrate that there’s some advantage of injecting 2 milligram or higher dose in multiple individual lesions has any benefit, I think initially it will be injected into single lesion. That’s our – that’s the feedback we’re getting right now, but obviously we are doing a market research study which will continue, okay, to give us some more feedback in the coming months.

Boris Peaker – Oppenheimer

And if we look at the study where you looked at single versus multiple lesion injections where you decided to go with the single lesion – with the single injection going forward, did you look at the mutational profile of the multiple lesion injections to see if maybe the ones where it did work or the one where it didn’t work very well, both of the tumors were the same or whether they were different?

Vijay Samant

I don’t know answer to that question. You’re asking a very important technical question. I’ll ask Alan Engbring to go through the paper and to our oncologist, (indiscernible), and get back to you on that, okay.

Boris Peaker – Oppenheimer

Okay. Well, congratulation on your progress and thank you for taking the questions.

Vijay Samant

Thank you, Boris.

Operator

At this time, we have no further questions. I would like to turn the call back over to Mr. Samant for any closing remarks.

Vijay Samant – President and Chief Executive Officer

Well, thank you for joining us in this call this morning. We look forward to seeing all of you in the near future. Thank you again.

Operator

Ladies and gentlemen, this concludes our conference for today. You may now disconnect.

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