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GenVec, Inc. (NASDAQ:GNVC)

Q2 2012 Earnings Conference Call

August 9, 2012 10:00 AM ET

Executives

Douglas Swirsky – Senior Vice President & Chief Financial Officer

Cynthia Collins – President & Chief Executive Officer

Analysts

Joseph Pantginis - Roth Capital Partners

Julie Bickel - Boenning & Scattergood

Peter Stackeof [ph] - Private Investor

Operator

Good morning ladies and gentlemen, welcome to GenVec’s 2012 second quarter earnings conference call. My name is Bonney, and I will be your conference facilitator today. At this time, all participants are in a listen-only mode. After GenVec’s management concludes their remarks, there will be a question-and-answer period. (Operator Instructions)

We would like to remind everyone that this call is being recorded today, Thursday, August 9th, 2012. If you do not wish to continue your participation, you may disconnect at any time. I will now turn the call over to Mr. Douglas Swirsky, GenVec’s Senior Vice President and Chief Financial Officer.

Douglas Swirsky

Thank you for participating in this call. Joining me this morning is Ms. Cindy Collins, GenVec’s President and CEO. During this call, we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act involving risks and uncertainties and our actual results may differ materially from our expectations.

For a complete statement of these risks, please review statements made in our SEC filings and this morning’s press release. Today, you will hear Cindy review GenVec’s strategy and discuss the progress we are making. I will then provide you with an overview of GenVec’s second quarter financial results.

After these remarks, Cindy and I will be happy to take your questions. We are optimistic about the opportunities at GenVec. We have developed a focused and novel product portfolio based on our core proprietary technology. We believe that our programs in hearing and balanced collaboration with Novartis in particular provides shareholders with a substantial opportunity.

On this call, Cindy will highlight key programs where we see exciting growth potential. A major development this quarter was the appointment of Cindy Collins as GenVec’s new President and CEO. For those of you unable to attend our recent annual meeting of stockholders, this call will be a first opportunity to hear directly from our new CEO.

Cindy has a wealth of experience and bring significant business, strategic and leadership skills to our management team. Prior to joining GenVec, she served as Group Vice President, Cellular Analysis of Beckman Coulter. Prior to that, Cindy also served as Chief Executive Officer of Sequoia Pharmaceuticals, a private biotechnology company developing antiviral drugs. Earlier, Cindy was President of Clinical Micro Sensors, Inc., a wholly owned subsidiary of Motorola where she directed the development and commercialization of molecular diagnostic microarray products and led the eventual strategic divestiture of the division.

Before Motorola, she spent over 17 years at Baxter Healthcare in a variety of executive roles, including President of Global Oncology and Vice President of Strategy and Portfolio Management of BioScience.

As you can see, Cindy Collins is a significant addition to our team and is a great asset to the company and its programs. With that, Cindy will now tell you a little more about herself, discuss GenVec’s business strategy and provide you with some updates on GenVec programs. Cindy?

Cynthia Collins

Thank you, Doug. My first two months at GenVec have been very interesting, and I am spending significant time evaluating our technology and product portfolio pipeline to determine the best path forward to increasing shareholder value. I believe that GenVec has a promising product portfolio, validating partnerships and a solid cash position.

Beyond the bio that Doug provided, let me tell you a few additional things about my background. I come to GenVec from Beckman Coulter, a publicly traded diagnostic company where I had P&L responsibility for a $1-billion global diagnostic and life sciences business. Prior to Beckman Coulter, I was the CEO of a venture-backed drug discovery company developing next-generation HIV therapeutics.

Before that, I ran global businesses for Motorola and Baxter Healthcare and began my career with Abbott Laboratories. I have experience in small molecule pharmaceuticals, therapeutic proteins, vaccines, gene and cell therapy, diagnostics, medical devices and life sciences. My educational background is a Bachelors Degree in Microbiology from the University of Illinois, Urbana Champaign, and an MBA from the University of Chicago.

I have 32 years of experience in leading technical and global businesses in a variety of therapeutic areas, particularly oncology and infectious diseases. I also have a great deal of business development and alliance management experience. Before deciding to join GenVec, I did a lot of due diligence. What I found is a company with a robust technology platform, talented people, strong partners and an exciting future. I believe a key element of GenVec’s success will be a strategy to develop product programs through collaborations. This strategy reduces the risk associated with drug development and allows us to pursue new opportunities while keeping our cash burn rate low. We have established partnerships with leading organizations like Novartis and Santa Fe, who are experts in taking drugs through development and inter-commercialization and can and will bear the heavy financial lifting that is required to do so.

Collaborations and partnerships like these brings the skills and capabilities that increase the probability of success, while reducing our need to access outside capital. I see our key growth strategies as one, advancing the current programs; two, adding new opportunities to the pipeline; and three, validating new opportunities through collaborations.

Let’s talk about our lead program. Hearing loss represents a multi-billion dollar market that could represent hundreds of millions of dollars per year in royalties to GenVec, which is a considerable amount on a per-share basis. This is an addition to the funded development and milestone payments.

There are over 30 million people in the United States with some kind of hearing problem and the market is dominated by devices that do not address the root of the problem. Our hearing loss and balanced disorder program, which is being developed in collaboration with Novartis addresses the root cause of hearing loss through the regeneration of critical cells in the inner year.

Our unique approach offers the promise of restoring lost function and allowing people to once again hear well and enjoy a much improved quality of life. The current focus of this collaboration is the advancement of our lead candidate into clinical testing, which will trigger additional milestone payments. GenVec is not providing guidance as to when an investigational new drug application or IND will be submitted, although we do not believe that will occur this year.

However, we are excited by the possibility that the initial clinical studies in this program could provide an early indication of not only safety, but also a first indication of efficacy. This fully-funded highly innovative program is a great example of our partnering strategy. Our versatile platform technology, which we use to target and express the ATOH protein and cells in the inner year can also be used to deliver an antigen intended to provoke an immune response.

Thus, we have leveraged our core technology to create a pipeline of vaccine opportunities. I would like to spend a few minutes talking about our herpes simplex virus or HSV, and our respiratory syncytial virus or RSV vaccine programs. As many of you know, we are developing a therapeutic vaccine for the treatment of HSV, including HSV-2, the virus responsible for most cases of genital herpes.

There is no approved vaccine for HSV-2 and the estimated cost of treating HSV-2 in the United States alone are close to $1 billion, primarily for drugs and outpatient medical care. These drugs only address a subset of the afflicted population and do not prevent future infections.

At 2008 World Health Organization estimated that in 2003, there were 535 million individuals worldwide with HSV-2 and approximately 30 million of these cases were in the United States. In 2008, the Centers for Disease Control and Prevention, the CDC, reported the serial prevalence of this disease and the U.S. population had grown to approximately one in every six individuals.

HSV-2 infections are symptomatic approximately 20% of the time, presenting with painful herpetic lesions near the site of infection, generally the genital area. Infected persons may suffer 9 to 12 outbreaks in the first year. With time, these outbreaks typically become fewer and less severe. However, viral shedding and infectivity occur whether symptoms are present or absence and transmission of the virus from person-to-person often occurs without the knowledge of the infected individual.

This further increases the overall spread of herpes within the population. In addition, herpes infections predispose individuals to HIV infections. Currently, no drug permanently cures herpes infections. There are, however, various antiviral therapies available that alleviate painful symptoms of the infection. The current antiviral drugs are all utilized to suppress symptoms when they manifest.

Acyclovir developed by GSK as Zovirax, and Valacyclovir developed by GSK as Valtrex, both achieved blockbuster status. Both are now off patent along with Novartis’ Famciclovir or Famvir. These drugs can cause drug-related toxicities and often require multiple doses per day. Previous unsuccessful HSV-2 vaccine attempts had been made by many companies such as Merck, Novartis and GSK.

In 2010, GSK terminated the most advanced vaccine in development for genital herpes Synflorix, following disappointing results from the Phase III clinical study. Previous approaches have focused on T cells and the induction of antibody titers in vaccinated individuals. A growing body of knowledge in the field points towards a vigorous T-cell response as being critical, both for HSV viral clearance and containment. Therefore, interest in pursuing a vaccine both for prophylaxis and as a potential treatment for newly-infected individuals remains very high, given the substantial medical need and market opportunity.

GenVec’s HSV candidate is a genetic vaccine intended as therapeutic for the treatment of genital herpes. A secondary indication as a prophylactic for young adults for protection against herpes infection is also being contemplated. GenVec’s focus is to induce sufficiently high levels of HSV-specific T cells that will result in a reduction of symptoms, faster clearance of virus from infected areas and reduced recurrence of disease.

Preclinical data are being generated in industry-accepted animal models for HSV infection. Our proprietary technology is intended to induce a potent T-cell response, which is critical for an efficacious genital herpes therapeutic. Our experience in other vaccine programs demonstrate that robust T-cell responses can be generated by delivering antigens using GenVec’s proprietary adenovectors. Our proprietary approach to developing a vaccine against HSV could substantially reduce the morbidity caused by the disease and succeed where others had failed. We are working towards generating proof-of-concept data on this vaccine that will support partnering discussions around this program possibly as early as next year.

Turning to another important GenVec program, we continue to make progress in our RSV program. Preventing RSV infection is a significant unmet medical need that we are addressing with our proprietary vector technology. RSV infection is a significant cause of respiratory illness in children, the elderly and high risk adult, resulting in more than 100,000 hospitalizations annually in the United States. No vaccine against RSV is currently available and the market is only partially addressed through a passive monoclonal antibody Synagis, a product that generates sales in excess of $1 billion annually. Synagis is important as it provides us with key information regarding the levels of neutralizing antibodies, a protective vaccine with likely need to establish. We are particularly excited about our pre-clinical data demonstrating highly effective immune responses which protect against RSV infection and exhibit the desired safety profile. These data generated in accepted animal models overcome key efficacy and safety hurdles, plaguing other vaccine approaches. These hurdles include vaccine enhanced disease that results from an inappropriate or insufficient immune response, as well as the inability to avoid inactivation by maternal antibodies.

We’ve recently met with the FDA to discuss the development plan for our RSV vaccine. We were encouraged by the feedback we have received from the agency and we are continuing to explore opportunities to move this exciting program forward.

GenVec reached an important landmark as a company this quarter when we announced the approval of our first product a vaccine against foot and mouth disease in cattle. This achievement demonstrates GenVec’s ability to bring its technology through the regulatory review process and validates the utility of our core technology to make effective genetic vaccines. However, this approval has no direct financial impact to GenVec, the path towards revenue in our animal health program will be through our collaboration partner Merial, the animal health division of Sanofi. Successful development and commercialization of vaccines under this program will lead to modest royalties.

I will now turn the call over to Doug, who will review GenVec’s financial performance.

Douglas Swirsky

Thank you, Cindy. For the second quarter of 2012, our net loss was $3.7 million or $0.28 per share, which compares to a net loss of $1.2 million or $0.10 per share for the second quarter of 2011. Total revenue for the second quarter of 2012 was $2.5 million compared to $4.7 million in the second quarter of 2011. The decrease in revenue reflects a reduced manufacturing effort on the Novartis collaboration as we move closer to clinical trials in that program. Operating expenses were $6.2 million for the second quarter compared to $6 million for the comparable 2011 period.

The second quarter of 2012 was a productive period for research with some good accomplishments, as Cindy outlined. GenVec ended the second quarter of 2012 with $20.9 million in cash, cash equivalents and short term investments. We believe that we have sufficient capital to fund our operations for the next two years and can extend that runway through the achievement of milestones under our collaboration with Novartis.

Before we move on to Q&A, please note that we will not be commenting or answering questions regarding on-going litigation other than to say that we believe that the litigation that has been filed against the company and certain of its Officers and Directors is without merit and that we will vigorously defend ourselves from these claims and we will respond at appropriate point in the process.

I would also like to take a final opportunity on behalf of the entire company to thank Paul Fischer for his 17 years of dedicated service to GenVec. I am pleased to report that Paul is very much enjoying his retirement and is actively engaged in a myriad of interests.

This concludes our prepared remarks and we welcome your participation in the question-and-answer session. Operator, please proceed.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Joe Pantginis with Roth Capital.

Joseph Pantginis - Roth Capital Partners

Hi guys, good morning. Good morning, Cindy and Doug. A couple of quick questions if you don’t mind. First, I guess, Cindy, welcome aboard again, obviously you have been very busy. I wanted to get a little more sense hopefully from you, obviously you can’t talk about the specifics but you did talk about new potential opportunities as part of your strategic review. I wanted to see some – hopefully some potential color as -- what you might be interested and are looking for how potential new opportunities might synergize with your current technology platform, et cetera?

Cynthia Collins

Good morning, Joe. Thank you for the question. Well, as you know, I have been here a little over two months and I don’t have complete answers to those questions, but maybe I will just make a couple of remarks. And that is, we are looking at new opportunities and leveraging the technology platform. So we are looking for opportunities where the adenoviral platform would make good technical sense for new programs and I actually have cast my team in working with me to identify new opportunities that we might either develop internally or potentially partner in.

Joseph Pantginis - Roth Capital Partners

That’s very helpful. Thank you. And then, I guess just going towards the backend of your call, you did have that nice validation with the cattle approval for FMD vaccine. Your path to revenue you said it’s through Merial with modest royalties, I am just curious if you can comment and I know this is more a question for Merial but the types of the activities that they are engaging into bring FMD forward in Europe, as well as the porcine vaccine?

Douglas Swirsky

Joe, good morning, it’s Doug. We are not in a position to share any guidance as to when that program is going to manifest itself in royalties. We know that they are looking and evaluating it and trying to move it forward and we will look forward to providing an update when we can. Unfortunately, we don’t have a sense of what timing will be for that, but that is the way we will make money in that program. It’s just for Merial to successfully commercialize the vaccine in the markets that are endemic.

Joseph Pantginis - Roth Capital Partners

Sure. I understand. Then just lastly, I know you said you are not going to be providing any guidance on Novartis, I guess, I would ask the question in the sense that how has your collaboration been going? I mean, you are still pretty much engaged as ever with them with regard to any sort of technology transfer of things that you need to provide to them or, can you comment on that?

Cynthia Collins

Sure. I am happy to comment on that. The collaboration continues to go extremely well. We have communications with them on a very regular basis and we are very pleased with them as a partner. But I think it’s also important that we keep in mind that this is a first-in-class molecule. The development pathway and animal models and the things that need to be worked through are not well known and well established. While I think on earlier calls we had said that we had hoped that we would file an IND this year, I think the reality is that we believe it will be 2013.

Joseph Pantginis - Roth Capital Partners

Understood. Thanks a lot, guys.

Cynthia Collins

Thank you.

Operator

Thank you. Our next question comes from the line of Julie Bickel with Boenning & Scattergood.

Julie Bickel - Boenning & Scattergood

Good morning. I have a couple of questions. The first one is, well in the press release and on the call you talked about the pre-IND meeting with FDA and the RSV program. I was wondering if you could elaborate -- is there a time frame or the steps that need to be completed in order for that to go forward?

Cynthia Collins

Yes. Hi, Julie, how are you?

Julie Bickel - Boenning & Scattergood

I am good.

Cynthia Collins

We did have a very productive discussion with the FDA. We had the opportunity to review our pre-clinical CMC and clinical development pathway with them and we were very encouraged by the conversations. So, we think we have a very clear vision going forward and we believe that we will be moving towards an IND sometime in 2013.

Julie Bickel - Boenning & Scattergood

But can’t really talk about that vision or that plan, is that right?

Cynthia Collins

At this point in time I would say we really don’t want to provide much more color on the program.

Julie Bickel - Boenning & Scattergood

Okay. And then my other one would be – I know I have asked this question before, but given that Novartis has this sort of entire section in their latest annual report that’s specifically on GenVec, I wonder why you wouldn’t want to sort of capitalize on that and I don’t feel anything on the website and I don’t see any mention of it anywhere and it seems to me that if Novartis is devoting print in their annual report and they use terms in there like, you know, frontier of gene delivery and unprecedented, that would be something that you would be happy to sort of have as an endorsement and would want to point it out. So, I don’t know if there is a reason that you wouldn’t want to draw attention to it, but I guess my question is why wouldn’t you want to draw attention to it?

Douglas Swirsky

Julie, that’s a reasonable question and we will look at ways to appropriately leverage their enthusiasm for the program.

Julie Bickel - Boenning & Scattergood

Okay. The second part of that question, same idea but it really with respect to Dengue. I read an article the Sanofi vaccine protected against three of the four strains of virus. I think that GenVec’s vaccine is expected to protect against all four of the strains. I also noted that the annual revenue for the vaccine the estimates are more than $1 billion, that’s a number from Sanofi. So that seems like a very significant opportunity. Again, would you be able to capitalize on that press that’s already out there to sort of draw attention to connect rather than sort of having shareholders go out and try to connect the dots sort of give them a pathway.

Cynthia Collins

Another good point and you were correct, Sanofi did recently have a press release where they announced good progress with their vaccine that is in development and their vaccine well designed to be effective against all four sub units, it’s only showing response against three. The product that we have in our pre-clinical development is designed also to be responsive to all four sub types. As I believe, that program is a little bit earlier stage than the RSV and HSV programs that I spoke about. And so we did not talk about it today, but the concept and the data that we are seeing in our pre-clinical work is something that gives us good hope that we have got an effective design and as that program progresses we will give you future updates. I appreciate the comments about maybe providing a little bit more insight into our competitive landscape around our products and we will take that under advisement as well.

Julie Bickel - Boenning & Scattergood

Thank you.

Operator

(Operator Instructions) Our next question comes from Peter Stackeof [ph], Private Investor.

Peter Stackeof [ph] - Private Investor

Yes, good morning Cindy. I have two clarifications on a single question. I guess, the first clarification is -- I am trying to understand what is the purpose of having a new CEO if there is no new vision for the company? Basically what we have heard from you is that you have repatriated the vision which was chartered by the board and obviously as we can see by the stock price that hasn’t gotten us anywhere. So, how would you comment on that?

Cynthia Collins

So, thank you for comments. I believe that the most prudent thing that a new CEO can do is to evaluate the programs that we have underway, assess the competitive situation and then make decisions. And as you all know, I’ve just joined the company a little over two months ago. As I stated we are looking at our existing programs. We will continue to evaluate those, we will continue to evaluate the competitiveness of those and we will look for new opportunities to bring in house. And so I think in fairness, I need a little bit of time working with the team and getting to know the company and really understanding our strategic assets.

Peter Stackeof [ph] - Private Investor

Okay, follow on this clarification then. Can you tell me how much time do you need? I mean like, you are the CEO, you are paid as a CEO, so you have to know. Do you need 3 months, do you need 6 months? Can you tell us publicly how much time do you need to come up with a comprehensive plan on what to do?

Cynthia Collins

It’s a very difficult question to answer in terms of timing, I can speak through previous experiences where I have come into businesses with the change of leadership and typically, that is a 6 to 9 month horizon.

Douglas Swirsky

And Peter to be clear, we’re not just sitting here waiting for Cynthia to come out of her office with a grand new vision for the company. She’s evaluating all the company’s technology and its programs and looking for ways to maximize its value to shareholders. And while that’s happening simultaneous to that as she continues to direct the company to move forward in her programs in a manner consistent with the strategy that’s been previously put in place. And I think it’s too soon to declare that that strategy alone is not sufficient to generate shareholder value, over a timeframe that is typical for our industry. And so during the quarter we made progress, we had a good pre IND meeting with the FDA regarding the RSV program. We’ve continued to make progress with our other programs as well. So I don’t think that there is a sense here that shareholders should think that no progress is going to be made until the CEO completes some type of transition period. I think that we’re continuing to make progress and we’re looking forward to additional input from our new CEO.

Peter Stackeof [ph] - Private Investor

But I mean Doug, I hear very clearly what you’re saying but I mean just looking at the facts for the last 12 years we are following exactly this strategy which was charted by the board and we can see that the share price had went down from $10 to $0.20. So basically, we have a clear conclusive evidence that this strategy is not working, unless I am missing something.

Douglas Swirsky

Peter, there is no guarantee that we’ll be ultimately successful. However, I think if you review companies that were successful in our industry, the majority of them at some point proved very low depths[ph] here, in terms of their share price performance. It’s a very tough industry and even the folks that have been successful in the industry and we endeavor to be one of those successful companies at the end of the day. But even those companies had tremendous lows and were selling for cents, before things turned around. I think if you look at it really high quality companies like Celgene, you look at their stock chart, you’ll realize that it will not be an unusual story if we succeed that we went through some difficult periods from a capital market’s point of view.

Peter Stackeof [ph] - Private Investor

Okay, so I guess while I’m going to finish this first part is by quoting Einstein who basically you know the quote “doing the same thinking and expecting a different outcome” so you can finish from here. So okay, moving onto my second clarification is in the press release this morning you say this is GenVec’s first approved product regarding the FMD vaccine, is that correct?

Cynthia Collins

Yes that’s correct.

Peter Stackeof [ph] - Private Investor

Okay, so Cynthia, can I ask you this question? So, whenever somebody is talking about a product I guess this is probably semantics in English Grammar more than anything, a product assumes that it can be produced and bought. So let’s say assuming it let say, Homeland Security comes in tomorrow morning and says we need 300,000 doses of this vaccine for this string, can you tell me who has the capacity and can those 300,000 doses be produced and in what time frame?

Douglas Swirsky

So just to be clear, we don’t anticipate that GenVec will make any money in this program beyond our relationship with Merial and their ability to get the product commercialized in markets where the disease is endemic. We don’t see a pathway for dollars into the door any other way for the company at this time. I think we make suitable caveat to our discussion, that’s our first approved product, we state very clearly our view on this monetary value. We see a great technical validation for the company and its approval. So I think your points are good one and if we weren’t providing the appropriate caveat and sort of disclaimers in our discussion of it as a product, I would understand the concern.

Peter Stackeof [ph] - Private Investor

So basically Doug you might understand basically this (inaudible) because of the disclosures, this is just some magical thinking, in other words we’re calling something product which is actually not a product in the linguistic sense of the word product, am I correct?

Douglas Swirsky

Well, it’s an approval, it’s a product and we state very clearly what we believe that means for the company, so I understand that we would like it to be something different, we’d like to be a product of blockbuster potential that we’re hanging our hat on that, we believe will lead to significant value creation, but we don’t believe that. We believe it’s a product that will arise (inaudible) technical validation shows our ability to move things through the regulatory process and as I think sets the ground work for products that we do believe will be beneficial to shareholders in terms of being able to sell a product, get royalties and move forward from there. So, I don’t think that it’s us trying to be cute with the disclosure, we’re saying right off the bat in every statement we made regarding it that, it represents the company’s first approved product we don’t see significant revenues from it.

Peter Stackeof [ph] - Private Investor

So, can somebody buy 10 doses of this product then? Let me ask you this way

Douglas Swirsky

No its available on an emergency basis and that would get handled through the government.

Peter Stackeof [ph] - Private Investor

So, is the government going to get it for free let say assuming theoretically we have an emergency, can you walk me through the process because if the single strain there is seven strain, but let say assuming we have theoretical emergency and let’s say the government also meets this particular strain of your product. Can you walk me through how the process is going to work? I want to know because you are saying it is a product, if it is a product it has to be produced. Can you walk me through how this will work in a case of an emergency Doug.

Douglas Swirsky

I think we’re going to have to disagree on the answer to the definition of the product. We believe it meets the definition of a product that people can relate to and when we provide the appropriate caveat that is not an area where we’re going to make money and beyond our collaboration with Merial we think that is very clear what we think it is. In terms of being able to walk through in the case of an emergency to be clear, GenVec does not have a CBB licensed facility, we are not going to manufacture the product, that is going to get handled in a different manner and how they get handled is probably not determined in the call because it is not something that we’re going to have an economic participation in beyond as I previously discussed.

Peter Stackeof [ph] - Private Investor

Okay, thanks. And so final question which is actually my question is obviously it is kind of becoming pretty clear that the company is running low on cash because of burn rate and lack of revenues. Can you explain and maybe if you think you can explain to me what is the strategy keeping 12 months from now what we see will be a $10 million or less and at that point the company will have to raise cash if it wants to stay viable, what would be the strategy for raising capital for the company?

Douglas Swirsky

Thanks for the question Peter, I’ll answer it and have Cynthia might have a follow up comment. We believe that we’ve had sufficient capital to last the next 24 months. We believe that run away will get extended as we achieve milestones under the Novartis collaboration. We also are obviously looking to move our programs forward our collaborations often help us extend our cash run away. So, I think we’re well capitalized in the context of looking at us as an industry and being able to say if 2 years plus cash at any time is a good place to be for this industry. However, we raise money in the future obviously our goal is to move programs forward. We think moving forward programs forward with collaborations is a efficient way to do that and that can definitely lead to lowering our burn rate in the future. We’re not going to take financing off the table, but we realize that (inaudible) right now and it is not an immediate goal of the company.

Peter Stackeof [ph] - Private Investor

But, I said looking forward 12 months Doug, I may only see – you know what I mean?

Douglas Swirsky

I can’t predict with the capital market…

Peter Stackeof [ph] - Private Investor

Obviously, the company is not going to wait until the cash is zero to raise money? Obviously I am assuming that right and so 12 months from now we’ll have about $10 million might be even less based on the current rate, so some time between now and next August the company will have to raise money in some shape or form and so I am assuming the CEO should have a plan or start thinking about it is probably thinking about it now on how to do that? I mean that is how management works right?

Douglas Swirsky

Well, if either Cindy or I could predict with certainty what the capital markets will look like for development of biotech companies 12 months from now, we probably working in different capacities within our industry. We don’t know what the markets are going to be, will be very thoughtful at that time to figure out the best way to continue to move our programs forward in the capital markets environment as the time that cash becomes something that we feel needs to be added and in the mean time our goal here is to execute on the business plan that reduces our reliance on outside capital and (inaudible) goal for the company and that is the key part of the business strategy and if things don’t come to provision, but we continue to make progress and capital is required we’ll do so in the most efficient and effective manner available to us at that time, but we can’t predict what the markets will look like in 12 months, Cindy to you.

Cynthia Collins

I absolutely agree with your comments Doug and as I said we are very interested in continuing to partner our programs and we will look to do that in a way that optimizes the value for shareholders.

Peter Stackeof [ph] - Private Investor

I see, sounds great. Thank you guys.

Cynthia Collins

Thank you.

Peter Stackeof [ph] - Private Investor

Bye

Operator

Thank you. (Operator Instructions) Ladies and gentleman that concludes the question and answer session with GenVec management. I would now like to turn the call over to Ms. Collins for closing remarks.

Cynthia Collins

Thank you for your interest in GenVec and for joining us on today’s call. We look forward to keeping you updated our progress. Our next earnings call will be in November and in October we will be presenting at the Bio-investor Forum in San Francisco.

Operator

Thank you for your participation in today’s conference. This concludes the presentation, you may now disconnect. Good day.

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