Good day, ladies and gentlemen. And welcome to the Novavax Second Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host, Ms. Andrea Flynn, Director of Investor Relations at Novavax. Ma’am the floor is yours.

Thank you, and good afternoon. This is Andrea Flynn, Director of Investor Relations at Novavax. I would like to thank everyone for joining today’s call to discuss our second quarter 2017 financial results. A press release of our earnings is currently available on our Web site at novavax.com, and an audio archive of this conference call will be available on our Web site later today. Joining me today’s call is Novavax President and CEO Stan Erck, together with our Vice President of Clinical Development Dr. James Cummings and Chief Financial Officer, Buck Phillips. President of Research & Development Dr. Greg Glenn and Chief Medical Officer, Dr. Louis Fries, will be available for the Q&A portion of the call. I’ll now turn it over to Stan to begin today’s call.

Thanks Andrea, and thanks everybody. And welcome to our second quarter 2017 earnings call. We’ll switch to slide two and I will invite you to study the Safe Harbor statement at your leisure, and then we’ll move on to slide four. So this is our agenda for today’s call. Today’s call will focus on our discussion on what I think is a major breakthrough for the Company, a new flu vaccine candidate that has emerged from our decade-long seasonal and pandemic flu program. Our RSV programs remain the clear high priority of the Company with a Phase 3 trial in progress for maternal immunization and a new Phase 2 efficacy trial in COPD subjects planned for 2018. However, since we had a detailed conference call on these programs two weeks ago, I think the reoccurrence in our disclosure, I’m happy to answer any questions that you have regarding RSV in the Q&A segment. On this call, as Andrew mentioned, you’ll here Buck Phillips, our CFO regarding our financial update; Greg Glenn, our President of R&D; and Louis Fries, our Chief Medical Officer and Senior VP, are available for Q&A. But we’ll not be presenting. And I’d like to introduce you to Colonel James Cummings retired and MD, a specialist in infectious diseases, who is Vice President of Clinical Development and is Head of Influenza and emerging virus’s vaccine programs. Dr Cummings has been with the Company for almost two year, and comes to us from the Department of Defense, where he was most recently Director of DoD’s Global Emerging Infectious Surveillance and Response System. James took on the assignment as project lead for flu and reports to Louis Fries, our Chief Medical Officer. Before we go into the program slides, let me turn the call over to our CFO, Buck Phillips, who will walk you through the second quarter earnings report. Buck?

Thank you, Stan. Today, we announced financial results for the second quarter and six months ended June 30, 2017. Summary financial statements can be found in today’s press release. We recorded a net loss of $44.5 million or $0.16 per share for the second quarter of 2017. This compares to a net loss of $79.4 million or $0.29 per share in the prior year period. Revenue for the quarter was $6.7 million compared to $2.5 million for the same period in 2016. This 169% increase in revenue in the 2017 period over the 2016 period was driven by higher revenue recorded under the Bill and Melinda Gates grant of $89 million. As discussed in our prior calls, the BMGF revenue is directly related to the operating activity in the prepared trial, our Phase 3 trial of the RSVF vaccine to protect infants via maternal immunization. We continue to expect an increase in BMGF revenue in 2017 relative to 2016, which relates to the continued ramp in enrollment and increased level of activities as the prepared trial enters its third season of enrollment. R&D expenses decreased 40% to $39.3 million in the quarter compared to $64.9 million in the same period in 2016. The decrease in R&D expenses was primarily due to the decrease in RSV vaccine clinical trial activity in the second quarter of 2017 relative to the second quarter of 2016; specifically, the fully enrolled older adult Phase 2 and Phase 3 clinical trials in the second quarter of 2016. We also experienced lower employee related cost in the second quarter of 2017 relative to the second quarter of 2017. G&A expenses decreased 37% to $8.9 million in the quarter compared to $14.1 million in the same period in 2016. This decrease is primarily due to lower professional fees…

Thanks Buck. And before I start, let me point out that this is a webcast, and we typically don’t webcast our earnings calls. And in this webcast, we chose the webcast because James will be presenting a presentation on our flu data, and the data slides involved in that. And so, hopefully, you can be part of the webcast. If you can’t, the slides will be found on our Web site. And so you could either follow during the presentation or follow it after the presentation. And I will be referring to certain slides throughout the presentation as will James. So to start, today’s presentation is primarily about progress in flu program. So this is the first slide, is our only RSV slide. But let me use it to remind you of what we presented two weeks ago on our RSV program review. Our program to protect infants by a maternal immunization is expanding now into 80 sites across 11 countries. We’ve just entered into our third global season, and we’ve been ramping to this level all year. We have been intensively studying the science around our RSV vaccine, and have been reviewing all of our clinical data, including from our Phase 3 trial in the older adult population, and from recently unblinded in Phase 2 trial in the same population. Our fillings tell us a few things. We’ve identified that the structure of our vaccine is a prefusogenic RSV F antigen, one that induces very potent antibodies that are responsible for the demonstrated efficacy in multiple clinical trials, including in our Phase 3 trial. We’ve taken the vaccine that was used in previous trials, and shown in a newly unblinded Phase 2 trial that we can make the vaccine even better by adding an adjuvant to the antigen and…

Thanks Stan. Today, I’ll provide you with an overview of our NanoFlu vaccine program. Our nanoparticle influenza vaccine is based on the hemagglutinin antigen, or HA, which is found on the surface of the flu virus. In the figure on the right, the globular head region, featured in red, contains the receptor binding region of HA. This is above the stem domain seen in gray, which supports the head domain and anchors the HA structure to the viral envelope. The receptor binding region or globular head domain on the HA protein is the target for antibodies that prevent flu virus from binding to cells. These antibodies are highly strength-specific and dominate the immune response to conventional inactivated influenza vaccines. Antibodies to this receptor binding site can be detected by hemagglutination inhibition or HAI, which is an established surrogate marker protection from influenza. This surrogate marker of protection is recognized by the FDA and other regulatory agencies, and can be used as a basis for licensure. On slide 16, we see a label figure, as well as an actual cross-sectional image of our influenza nanoparticle. As you can see, there are multiple hemagglutinin antigens self-assembling around the nanoparticle core. This results in a very stable HA nanoparticle, which as I’ll show you in the next few slides, is highly immunogenic. The preclinical goals for our NanoFlu program were straight forward; to evaluate our HA-based nanoparticle influenza vaccine, adjuvant it with Matrix-M in the ferret model, which is the gold standard for preclinical influenza vaccine testing to assess the vaccines’ immunogenicity and its protective efficacy. We compared our NanoFlu vaccine with two leading commercial influenza vaccines from the 2016, ’17 season, Fluzone and Fluzone HD, which are both produced by the more historic egg-based approach. In addition to immunogenicity, we evaluated protective…

Thanks James. So I think maybe you can hear or you can’t say but you could hear in our voices, we’re pumped about our new product. I am well aware that our demonstration of immunogenicity and efficacy is in the nano challenge study, but this is the industry standard model that’s used in advance of all clinical trials. However, we plan for success and are now ready to move into an important Phase 1/2 trial in 330 over adults. This trial is designed to be large enough to demonstrate that our product can be differentiated in the head-to-head trial with Fluzone high dose. Success in this trial will lead us to request an end of Phase 2 meeting with the FDA. If we’re successful in receiving accelerated approval, we will move to a Phase 3 trial that could be finished in time to have pivotal data by the end of 2018. That trial will be based on measuring immune responses to our vaccine. So this next slide gives us some highlights of near term milestones and steps back up to the broader company perspective. So with maternal immunization, we expect to continue enrollment, such that we have sufficient enrollment by mid 2018 to initiate an interim analysis. One measure of success would be that we would have sufficient protection in infants to stop trial recruitment and begin preparation of our BLA in 2018. In our older adult RSV program, in 2018, we are targeting the initiation of an efficacy trial in the COPD population. In flu, we have several meaningful milestones over the next 18 months that could push this program into pre-BLA status by the end of 2018. Finishing up with highlights, I think we can see that we have many product opportunities in important markets; the basis for…

Thank you [Operator Instructions]. Our first question comes from the line of Ted Tenthoff from Piper Jaffray. Sir, your line is now open.

Thank you very much, and thanks for the upgrade both with RSV recently and with the additional programs. So I wanted to get a higher level view on how you guys are looking at competition now. Not just in RSV, but also in Zika. I know that’s a much earlier program. But how do you see the Zika threat playing out in U.S.? It was actually a lot less noise from it this year than I was expecting. So how do you guys see Zika continuing to be a bio-threat and an emerging viral threat in United States?

I’ll let James to take that.

Thanks Stan. So, for the upcoming data calls from CDC, we see that the rates of Zika have continued to increase, both in the United States continentally as well as the U.S. territories. We see, in the Southern and Central American areas, somewhat slower reporting of increase of data. And we think that that Zika infection continues to be an issue.

And how do you see competitive efforts, either therapeutics or vaccines, for Zika?

So I think the competitive efforts, when this was first announced I think there was some very robust number like 26 vaccines being developed. I think many of those are following away ours has not we’re using the same platform that we’ve used for Ebola and MERS, or Zika, for RSV, or flu. The strategy works for all the reasons that we just talked about with flu. I can’t impress on you enough about how every single aspect of our flu vaccine hit the mark in immunogenicity and being able to produce it in protection. And our expectation is that we can do the same with the Zika vaccine. We’re now in non-human primates. We’ve now vaccinated the primates with two doses out of the three dose regimen. And based upon those data, we will vaccinate third time and then we go into human trials sometime in the early part of next year with the vaccine just based upon our nanoparticle. We think we’re making the right kind of vaccine. So on all of the other programs, I think that -- I just can’t comment. I think ours will be successful more and more about what the direction of the market is. I think that my discussions with KOLs in this area stimulate the suggestion that there will be a certainly the Southern Hemisphere market, South American market and probably up into the Southern part of United States. I have no idea what the governmental position will be on purchasing. So I don’t know it’s a different market from both sides.

Yes, I agree with you. And I don’t think this is over by any means. And how do you think the time back to Phase 2 has changed the competitive landscape for RSV for you guys? Thanks.

I’ll be happy to address that question. So let’s take the two major markets that we’re talking, the older adult market and the maternal market. There is -- we had two other competitors that were in clinical trials of significance, and one was [indiscernible] and they ran their 1,900 person older adult program last year and cancelled it based upon the failure of the vaccine to work. We look at it. We saw a couple of things that we noted. One was is that they showed that they had the same attack rate that we did. So as a lower attack rate here and they confirm that. But then we worried about what can -- is there a vaccine indicative of not been able to vaccine in the older adult market. And I think not it’s a very different vaccine from ours. And so that’s why we’re pushing forward and that’s why we did a study this 205 study that’s why we looked at potentially adjuvant and doing and changing dose regimen. So they have dropped out of the market. So we’re in it. And then you look at GSK, they have a vaccine that they have of interest in the maternal market, and I think they’ve got an early stage elderly product. We have to be three to five years ahead of them on both of these programs. And so we have remained -- we’ve always been ahead, we’ve always been a few years ahead, not just around the corner and we think we’re still there.

[Operator Instructions] Our next comes from the line of George Zavoico from JonesTrading. Sir, your line is now open.

Thank you. And thanks everyone at Novavax for the update and for really interesting exciting data for the flu vaccine; couple of questions on that. First, in the figure, you showed the nanoparticle core. Is that part of the actual RSV antigen nanoparticle, and that’s where it self-assembles or is that a separate entity. I just believe it’s the former. I just want to make sure.

So that core is PS80, which is a detergent and hydrophobic, it allows the hydrophobic tail of our constructs and that’s part of our platform technologies to form a nanoparticle using a detergent mice cell. So that’s common -- that approach is common for flu as well as RSV.

And with regard to the table you had comparing the different vaccines. One of them, I think it was a high dose. Is that high dose from that’s quadrivalent with the [indiscernible]. Did you look at -- that strain was your nanocell?

This is James. Now actually the high dose is a trivalent vaccine, just as our vaccine, it's trivalent. The [indiscernible] strain is in the quadrivalent lower dose Fluzone vaccine. So we did not test against [indiscernible].

And you’ve demonstrated across your activity across different A stains, for H1 and H3. Do you think you have the same cross reactivity across the different B Victoria strains?

So there typically is across reactivity between those two leading disease is generally quite low. Now, going forward into our program, we expect to develop quadrivalent vaccine. We will evaluate in our Phase 1 trial, whether there might be more across reactivity base on the fact that everyone is been sensitized. We’re expecting to develop a quadrivalent vaccine. But for this trial, for this evaluation, we are comparing to the trivalent Fluzone high dose.

What about across different -- the H1 and H3. Do you see cross reactivity between those as well, or just within H3 client space?

So those are much more diverse. So no, right now, it would only make sense for us to look across H1N1s or H3N2s.

And finally last question regarding BARDA. It would be terrific if you could reengage in of course, because you’ve had a really good relationship with them. However, last time you submitted a proposal to BARDA, the wait time for a response was inordinately long. How long can you wait for a BARDA response if you need to go that way to move forward on what they would like to see, you guys do?

So we’re at point right now where this is so compelling to BARDA. This is right down the alley what they want. In fact, I remember if I told you, that a couple of years ago one of our quarterly meetings, they told me as we’re walking down the hallway said we’re like here to be open a flu program, but you guys seem to be focusing on nanoparticles and the other programs, and they seem to have some advantages. Why don’t you start switching this program over, and we did. And so this was actually at their suggestion and they would happily have been funding this program except as a nanoparticle flu vaccine, it was out of scope of their VLP flu vaccine. And so we, just because of government funding procedures, you had to read through the contract. We’re now back in the replace, we are exactly where they want to be it, and we’ve scheduled a talk with all with the BARDA people next week, all the high level people. And so we have a lot of visibility into that area. And I don’t know how fast the funding could be, but it’s not going to be years it’s going to be months. But I’m pretty sure the fund is going to be -- and this is all of their hard buttons you guys, hits all of their hot buttons or everything they’ve been trying to work on.

So you start the right proposals?

We do, but that’s not terribly wrong, we can do that pretty quickly.

And then finally one quick short question, the Fluzone is that one or two doses, a three weeks…

It’s one dose and it's a standard commercial. We wanted to go as, I think, we’ve said maybe mentioned it two or three times throughout this. We just think we want to go and we want to beat the best. And so that’s the best out there. And so they’ve been very successful in the older adult market, because there are 60 microgram dose, which is four times normal as shown to be, they did a nice study and showed that it was more effective than their low dose. But that’s the only trick, it's get a higher dose. And we beat that higher dose and ferrets with 15 microgram dose.

You’re going with two doses though?

No, we’re not. No we’re comparing. What we’re going to do is compare two different arms. We’re going to do a 15 microgram Matrix adjuvant dose, a 60 microgram Matrix adjuvant dose going against their 60 microgram egg-based vaccine.

I guess I was confused by the table, because it does look like you’re doing a dose of 0 and 21 days?

No, no just one dose.

Just flu free, we use two doses in ferrets because ferrets are profoundly naïve. But you don’t need to do that in humans.

Our next question comes from the line of Kevin DeGeeter from Ladenburg. Sir, your line is now open.

Stan or Glenn, can you just talk a little bit more about just how one thinks about moving forward the potential combination of the nanoparticle with an adjuvant for flu where we haven’t used adjuvants widely in the past. Just how you’re thinking about that from a commercial positioning standpoint?

Well, if you’re talking about adjuvants and flu vaccine we now have a flu adjuvant into an improved flu adjuvanted vaccine in the United States. So that fear has gone by the way side. And our vaccine our adjuvant has shown spectacular results in at least half of dozen different trials, it’s a in a product with [indiscernible] versus Phase 2 trials with an HSV vaccine. And I think the adjuvant has been very powerful in showing their ability to get efficacy in their trial. It’s been all the way from RH7 and 9 pandemic flu vaccine to an Ebola vaccine, which we consider to be the best Ebola vaccine on the planet. It’s been in the malaria vaccine, it’s been in our own RSV vaccine. So it’s widely used and I think we’re in over 1,000 people. So the issue and it's shown to be safe in all those settings.

And when one think about potential cost for goods and pricing. Do you think you can get commercially attractive margins pricing imperative? Do you think the profile you demonstrated would justify a premium and proper margins?

So way for our strategy, so I think you’re talking to flu now and flu now, all we have to, we’re going against high dose flu vaccine that vaccine is triple the price of the standard vaccine. And there is lots of room for good margin there with the manufacturing. These manufacturing advances we’ve made in the last 12 to 24 months are stunning. They have made and they’ve turned the product into what would be worried about cost all day long to one where cost of goods sold is not the issue here. And even with the Matrix adjuvant it's not a substantial cost of product.

Kevin when we look at this -- it's Buck. I second with Stan saying, the yield improvements here are fantastic on the antigen side. And don’t forget that the Matrix is in effective small molecules. So we can make that particularly volumes very cost effectively.

And then just one more question on similar line, if I may, I apologize if I missed this earlier. But when you think about potential scale up of this product, it seems like this should be relatively more straight-forward than perhaps some traditional flu vaccine products. Can you just remind us where you are with regard to a movement towards the commercial scale and what you think that might entail that line?

So we were saying that we could launch, where we are right now in Firstfield Road in Gaithersburg with a couple of thousand liter bioreactors. And then ultimately move into multiple 2,000 liter bioreactors with 10 fold yields in product. We can launch product and probably cover year’s worth of production as we’re getting market share. But this is a very significant improvement in the manufacturing. So we can launch -- we have launched more facilities for both the maternal and for flu. And of course as we get closer to launching both those products, we’ll decide whether we have to add capacity, and we have options.

And I’m currently showing no further questions. And now, I would like to turn call back to Stan, our President and CEO, for closing remarks.

Okay. Once again, thanks for the calls guys. I think we’ve made a pretty major advance here and look forward to showing the date over the rest of the fall. Thanks a lot.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program and you may all disconnect. Everyone have a great day.