SLS - NASDAQ

Remy Bernarda - Senior Vice President of Investor Relations and Corporate Communications Mark W. Schwartz - President and Chief Executive Officer Bijan Nejadnik - Executive Vice President and Chief Medical Officer John T. Burns - Controller and Principal Accounting Officer Tom Knapp - Interim General Counsel

Joseph Pantginis - ROTH Capital Partners Jason McCarthy - Maxim Group Reni Benjamin - Raymond James Financial, Inc. Rahul Jasuja - Noble Life Science Vernon Bernardino - FBR & Company

Good day, ladies and gentlemen, and welcome to the Galena Biopharma Incorporated Fourth Quarter and Year-End 2015 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will have a question-and-answer session and instructions will be given at that time [Operator Instructions] I would now like to turn the call over to your host for today's conference Ms. Remy Bernarda, Senior Vice President, Investor Relations and Corporate Communications. Ma'am, you may begin.

Good afternoon, everyone and thank you for joining our call today. For those of you listening via telephone, I would encourage you to visit our website and log into our webcast presentation. For our call, we will be using slides to enhance our information flow. The slides can be accessed on our website in the Investors section under Events and Presentation. These slides are posted both as a PDF document and will also be available on the webcast. The slides are viewer controlled, meaning that you the viewer, will need to advance the slides. Our speakers will alert you to the slide they are addressing. As listed on Slide number 2, on our presentation, during today's discussion, we may make Forward-Looking Statements about our revenues and clinical programs. Such statements include, but are not limited to, our trailing revenues in the first half of this year and the development progress of our clinical product candidates, including patient enrollment, trial initiations and collaborations. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those identified under Risk Factors in our Annual Report on Form 10-K, that will be filed today and quarterly reports on Form 10-Q and other documents filed with the SEC and available on our website. Actual results may differ materially from those contemplated by these forward-looking statements. Please now turn to Slide number 3, as I would like to introduce the members of management presenting on today's call. Dr. Mark Schwartz, our President and CEO; Dr. Bijan Nejadnik, Executive Vice President and Chief Medical Officer; and Mr. John Burns, our Controller and Principal Accounting Officer, who will discuss our financials. Please turn to Slide number 4, and Dr. Schwartz will begin our discussion.

Thank you, Remy, and welcome everyone to our fourth quarter and year-end 2015 corporate update call. I want to start this call to review the progress we've made with our clinical programs in 2015. So please turn to Slide 5. As you can see we completed to critical milestones for our PRESENT clinical trial last year and are poised for two additional milestones this year, which I will discuss in a moment. As a reminder, PRESENT is our pivotal Phase III clinical trial targeting HER2 for the prevention of breast cancer occurrence in the area of high unmet medical need. Last year, we completed an enrollment in the trial and over enrolled to a total of 758 patients. Across the 140 sites in North America, Western and Eastern Europe and Israel which is a major accomplishment. Targeting gynecological cancers our earlier stage immunotherapy program based on fully binding proteins is made up of two compounds GALE-301 and GALE-302 for the prevention of occurrence. This program made solid progress in 2015 reporting top-line efficacy and safety data from our Phase IIa trial and preliminary from our Phase Ib program. And finally, our hematology asset GALE-401 is a controlled release version of a Anagrelide for the reduction of platelets in patients suffering from myeloproliferave neoplasms. While we still have seven patients remaining on the follow-up portions of study, we reported our final Phase II proof of concept data on our primary endpoint in December demonstrating efficacy and potentially and improved safety profile. Please now turn to Slide 6. The NeuVax PRESENT trials is our most advanced program and by far the primary value driver of our development pipeline with three trials ongoing and two plan to initiate this year. 2016 is poised to be a very important for NeuVax, as we will reach two critical milestones in the PRESENT trial. Most importantly, we are still on track for the readout of our interim analysis in the second quarter, which is predicated on reaching the 70th event in the trial. Once we reach the 70th events we will prepare the data for a review by our Independent Data Monitoring Committee or the IDMC, and the IDMC will then conduct an interim safety and futility analysis. While we anticipated that the 70th events will be identified by March the final adjudication of the event will come in the end of this month or next month. Regardless to the exact timing around the 70th event, we still expect to announce results of the interim analysis at the end of the second quarter. Today, Bijan is going to provide and extensive detail and timing around our process for identifying and adjudicating these events and reaching our interim analysis. In addition to the PRESENT trial, we have two ongoing investigators sponsored trials, one co-funded by Genentech/Roche and the other by the department of defense with NeuVax combination with trastuzumab or HERCEPTIN. This year, we look forward to presenting our first data set from our NeuVax plus HERCEPTIN or what we call H&N Trial in the HER2 1+/2+ breast cancer patients as seen on the second line of the pipeline slide. This preliminary safety data is expected to be presented at a scientific congress in the fourth quarter. As announced last year, we are very excited to partner with MD Anderson and the National Cancer Institute on our important trial in women with Ductal Carcinoma in Situ. Bijan will elaborate more in this trial and we expect to initiate within next few weeks as we expand our NeuVax franchise this year. I would like to now make some comments around our corporate strategy with the ultimate focus on getting us to the primary endpoint of our PRESENT trial, which we anticipate in 2018. When I took over as President and CEO in August of 2014, I implemented several major strategic initiatives and I believe this helps to restructure the company will have positive benefits for Galena in the long-term. The most significant change was a decision to divest our promotional business allowing us to focus our resources on our clinical pipeline as the biggest value driver for the company led of course by NeuVax. Late last year, we reached agreement for the settlement of the derivative and class actions cases both of which should receive final quarter approval by the end of the second quarter of this year putting these cases behind us. And finally, led by our nominating governance committee, we have began the process to expand and strengthen our Board of Directors as we announced in December Steven Kriegsman will be retiring from the Board and we are actively getting candidates to replace his position as well as adding another Director. These new Director will augment the expertise experience and skills of our Board. Given the volatile and unpredictable financial markets, I'm pleased that we are able to successfully raise capital at the beginning of the year to strengthen our balance sheet and continue our focus on moving our pipeline forward. As John will review in detail later in this call we have several nonrecurring expenses increasing our burn rate in Q4 and then the first half of this year. Given these elements, we believe it is prudent to calibrate the planned investments in our programs in order to optimize the allocation of our resources. Therefore, we are taking a conservative approach to our clinical spend and maintaining our primary focus on NeuVax in preparations for its path to approval. As there are other clinical programs continue to mature we are reviewing all of our non NeuVax assets and recalibrate in new trials initiation base. As a results, we expect our quarterly cash burn to decrease to between $9 million or $11 million in the second half of this year. On that note, we are constantly evaluating options for further funding in addition to our current equity instruments. We are evaluating opportunities for non-dilutive sources of capital. Our business development efforts remain very active as we seek development and licensing partners in order to drive the highest value for our programs without sacrificing long-term shareholder value. With that, I will turn the call over to Dr. Bijan Nejadnik to discuss our clinical programs with the focus on NeuVax. Please turn to Slide 7. Bijan.

Thank you. As Mark mentioned NeuVax remains the number one focus in the company and in particular on our Phase III PRESENT clinical trial. PRESENT stands for the prevention recurrence in early stage node positive breast cancer with low to this immediate HER2 expression with NeuVax treatment and the study schema can be found on Slide 8. Today, I will concentrate on our plan and present treatment analysis, which we expect in the second quarter of this year. On the slide, I have highlighted our interim analysis in red, this is one of the two critical milestones for the trial as it represents a de-risking event and as importantly the interim analysis brings us half way to the full number of events required for the primary endpoint. As a reminder, we enrolled the total of 758 patients who constitute Intention To Treatment or ITT population and the primary endpoint for the trial is Disease-Free Survival or DFS upon reaching 144 events with three years minimum follow-up. I would like to take this opportunity to explain detail of process for evaluating qualifying event in the trial. On Slide 9, I have outlined some key definitions related to the interim analysis and I will discuss this briefly. In the trial protocol, the qualifying event is defined as a recurrence of the primary breast cancer either locally in the breast, regionally in the lymph nodes or distally that would be labeled metastatic as in the bone, lung or breast. Occurrence of another cancer or death from any cause, Central Imaging is an independent radiology group to evaluate radiographic images. Our Endpoint Adjudication Committee or EAC is an independent team of physicians, experts in breast cancer diagnosis that evaluates every potential event in the trial. The EAC consist of two medical oncologists and one radiologist. The interim analysis is pre-specified futility and safety analysis on the first 70 adjudicated events, which evaluates the likelihood of this study to achieve its pre-specified objectives. And finally, our Independent Data Monitoring Committee or IDMC is a team of physicians monitoring the overall conduct of the study and safety data and will perform interim analysis and provide the recommendation. This team includes two medical oncologists, one cardiologist and one statistician. It is important to note that the study is double-blind, which means the physicians, the study staff, the company, the patients and all people working on the trial are unaware of whether a patient is receiving is NeuVax or placebo. The EAC is also blinded to the treatment of site. The IDMC is the only committee that will receive information on each patient's treatment assignment. I would like to address the rationale behind having independent central imaging and an independent endpoint adjudication committee. There are two critical objectives for having these every valuable entities within the trial. First, these groups guarantee the identification and qualification events or not, and qualifying events or not subject to any regional or side to specific practices that may need to volubility within the sites. The central imaging and EAC ensure that the identification of these cases are completely independent and free of bias. Ultimately, implementing the process as a part of trial operations with enhanced integrity of data this should result in a robust and high regarding submission package for the regulatory agency upon filing a Biologics License Application or BLA to obtain marketing authorization. As you can see on the Slide 10, there is a multistep process adjudicated an actual patient event, sadly if the patient dies, this is automatically counted as a qualifying event, as I already defined above. Alternatively, a patient maybe found to be symptomatic through a physician visit or scan or patient may begin to exhibit symptoms, such as bone pain and reported to their physician. After further evaluation and an appropriate work up, the physician may diagnosis the recurrence or new cancer, in case of cancer and submit the case to central imaging where the scans are reviewed and assessed for qualifying event. The imaging evaluation is performed by two expert radiologist with a third radiologist to adjudicate any discrepant assessment. The imaging results along with all of the clinical information about the patient's history and recent medical data are then complied by an independent medical group. Once the data has been collected and reviewed for completeness, the medical group then prepares a detailed patient file for the EAC. The EAC meets periodically to adjudicate the cases, submitted and makes the final determination on the qualifying event. Advancing to Slide 11, I have laid out the next steps of the process to have the data analyzed and assessed by the IDMC for interim analysis. Let me remind you this is not an efficacy analysis, once the 70 qualifying events are confirmed by the EAC the clinical data is compiled and submitted to the IDMC. The IDMC then needs to evaluate the data package for safety and futility. To reiterate what marks there earlier, regardless of the timing of the 70th event, we expect the IDMC review to be completed and the result of interim analysis to be announced by the end of June. Moving now to a review of our additional supportive trials with NeuVax as you can on a Slide 12. We have two ongoing breast cancer trials that evaluating NeuVax in combination with trastuzuumab and trial planned in DCIS which I will elaborate on momentarily. And finally, we have a Phase II trial planned in gastric cancer with our partner Dr. Reddy's Laboratories in India. In collaboration with Dr. Reddy's, in January we presented observational data in patients in India with gastric cancer, showing approximately 25% of the patients met the projected clinical protocol population of all levels of expression of HER2 And HLA A2 positive and/or A3 positive, as we plan for the Phase II clinical trial. The result indicates an acceptable potential for enrollment rate given the high incidence of gastric cancer in Indian population and provide information on the screen failure rate, expected in the study. We expect Dr. Reddy's will initiate the trial in the fourth quarter of this year. Turning to Slide 13, we are looking forward to initiating our Phase II trial in women with Ductal Carcinoma in Situ called DCIS. According to American Cancer Society, DCIS is the most common type of non invasive breast cancer with about 60,000 new cases diagnosed in the U.S. each year. Ductal refers to the fact that a cancer starts inside the milk ducts, carcinoma refers to any cancer that begins in the epithelial cells of the skin or epithelium of tissues covering internal organs or in this case, the wall of the duct and in situ means in its original place. DCIS is non invasive, because it has not spread beyond risk duct into any normal surrounding breast tissue, but it can increase the risk of developing an invasive breast cancer in the future. Women who have breast conserving surgery for DCIS otherwise known as lumpectomy without radiation therapy have about a 25% to 30% chance of having a recurrence at some point in the future. If you include radiation therapy after surgery the risk of recurrence drops to about 15%. On Slide 14, we depicted trial design and objectives for our Phase II trial and titled VADIS. Vaccine in women with DCIS breast cancer. As you can see, the primary endpoint for the trial is immunologic, evaluating for NeuVax specific cytotoxic T-cells. The study will just remind whether long lasting immunity is in used. Importantly this trial will evaluate the use of NeuVax in very earlier stages of breast cancer and can potentially change the treatment paradigm. Secondary endpoints with evaluate toxicity, immune and cytokine responses and the presence of the tumor at the site of resection. Should the study results be positive, NeuVax may potentially be evaluated in a large randomized trial for primary prevention of invasive breast cancer thereby studying significant number of women from surgery and radiation treatment. The University of Texas MD Anderson Cancer Center Chemoprevention Consortium is the lead institution for this multi-center trial. For this enrollment is 48 patients and we expect completion of the trial in approximately two years. Moving now to Slide 15, you can see the current status of our second immunotherapy program with two assets GALE-301 and GALE-302 both GALE-301 or E39 and GALE-302 or E39 Prime, are peptide vaccines derived from folate binding protein and are targeting the prevention of recurrence in breast and in ovarian and endometrial cancers where the recurrences are high and the outcomes are often quite poor. For the single agent GALE-301 clinical trial we plan to present vaccine booster data as well as a two year DFS data this year. We are also looking to present supported dosing and immunologic data from both programs over the course of this year. Similar to our GALE-301 and 302 programs, we're evaluating our options to advance our GALE-401 program with an overview provided on a Slide 16. GALE401 is a controlled release version of Anagrelide to lower placed levels and patients with myeloproliferative neoplasms. In our pilot Phase II trial GALE-401 demonstrated a prolonged clinical benefit with a potentially improved safety profile. Our current sense are to publish the final Phase II manuscript in the fourth quarter and we are also assessing a variety of scenarios to advance GALE-401 into a trial that is positive to lead to registration for the assets. Please turn to Slide 17. In summary, our performance at Galena remain incredibly excited about our programs and opportunity we have to truly make an impact on patient’s lives. Posted on our social media site last month was an interesting press release issued by researchers and the Fred Hutchinson Cancer Research Center and Johns Hopkins Medical Institute where they confirm that the breast cancer cells travel together throughout all stages on the practices. Dr. Kevin Chang described these cells as “This gang of thugs breaks off at the primary site, gets into the bloodstream and then sets up shop in distant organs.” Gangs have a much better ability to metastasize than single cells,” Dr. Chang and his colleagues also found that by breaking up the gangs into individual cells they die. Our scientist finds really relevant and it supports our development strategy that massive ecstatic cells are separating in the bloodstream patients who have “survived cancer” and the ability of NeuVax to stimulate immune system to identify and kill this [Indiscernible] allowing NeuVax to potentially prevent the returns of cancer. With that, I would now like to hand the call over the John Burns to discuss our financials. Please turn into slide 18. John.

Thank you, Bijan and good afternoon everyone. In today's press release and slides our financials are presented in a manner hope to see so you can distinguish between our continuing and discontinued operations as well as elaborate on significant nonrecurring expenses. I would now like to make several key points and all of my figures will be in U.S. dollars. On Slide 19. I’ve posted our statement of operations as found in our press release. First, our operating loss includes our general and administrative and clinical development expenses. As reported our operating loss decreased year-over-year from $43.9 million in 2014 to $34.2 million in 2015. This decrease as anticipated was primarily the result of completion of enrollment in our Phase III PRESENT trial for NeuVax. In addition, we experienced a reduction in stock based compensation and a reduction in non-insured reimburse legal expenses associated with ongoing litigation and regulatory proceedings. Loss in continuing operations include operating loss as just describe as well as non operating income and expense and income taxes. Loss from continuing operations increased from $28.3 million in 2014 to $38.9 million in 2015. Primarily related to $16.6 million non-cash gain on our warrant liability in 2014 compared to a $1.2 million non-cash gain on our warrant liability in 2015. Total non-operating expense in 2015 was $4.3 million compared to a non-operating income of $15.6 million in 2014. In 2014, the $16.6 million non-cash gain on our warrant liability previously described was partially offset by $1.1 million in interest expense. In 2015, the $1.2 million non-cash gain and warrant liabilities was offset by $5.3 million for the expenses related to the settlement of our securities and derivative losses and $0.8 million in interest expense. Our discontinued operations stem from the divestiture of our commercial business that was finalized in December of last year and was classified as discontinued operations in the third quarter of 2015. It is also important to note that we retrospectively recast our previously issued 2014 and 2013 annual financial payments to present the commercial business as discontinued operations. As a result, our loss from discontinued operations for 2015 was $24.9 million, which includes an $8.1 million non-cash impairment charge from classification of assets held for sale. A $4.5 million non-cash loss on sales of a commercial business asset and $1.3 million in severance and exit costs. Our loss in discontinued operations for 2014 was $8.3 million. Separately, as noted on the slide I've highlighted the quarterly and annual breakdown of our earnings per share calculations which are heavily affected by our discontinued operations and nonrecurring expenses. Our nonrecurring expenses are depicted on Slide 20. For the fourth quarter and year-ended 2015. In addition to the items that I just mentioned in discontinued operations, you can see a nonrecurring charge of $5.3 million for expenses associated with our announced settlement of the securities and derivative law suits. There remain $3.3 million net accrued as of the year-end which we expect to payout upon final court approval of the settlement in the second quarter of 2016 with $2.3 million cash and $1 million in our common stock. I would now like to go through our current cash position and what we expect going forward. Please turn to Slide 21, for the chart breaking down our cash and cash equivalents. As of December 31, 2015 Galena had cash and cash equivalents of $29.7 million compared with $23.7 million as of December 31, 2014. The $6 million increase in cash represented $47.4 raised from issuance of common stock and $11.3 net proceeds from the sale of commercial assets, partially offset by $38.8 million used in continuing operating activities, $9.4 million used in discontinued operating activities and $3.9 million in debt service payments. As we seen in the chart by broken down our cash flow [Indiscernible] are continuing and discontinued operation I just described. In addition, in January of this year there we raised an additional $20.1 million in net proceeds or an underwritten public offering, which is reflecting in the current cash position of $38.2 million on Slide 22. This overview provides our current cash position and expected burn in the first half of the year. To-date in our cash position we have incorporated the non-recurring expenses related to our discounted operations as we paid out accrued expenses related to severance, broker and license transfer fee and channel liability obligations for our former commercial products. As part of our projected Q2 2016 cash balance, we also expect additional non-recurring legal expenses, but as Mark mentioned, we expect this cash burn to decrease in the second half of the year to between $9 million and $11 million to quarter. Moving to Slide 23, I will now turn call back over to Mark.

Thank you, John. As we have discussed our opportunity of NeuVax is clearly our biggest value driver and if you turn to Slide 24, you can see that it also offers a greatest near-term commercial potential with a positive outcome in the PRESENT trial NeuVax represents more than a $2 billion opportunity in the U.S. As we add indication the ultimate potential for the asset continues to increase. Now turning to Slide 25, here are the milestone we currently expect to achieve in 2016. As Bijan discussed for both our DCIS trial and achieving 70 events in our present trial, we expect these to happen by the end of this month next month. Regardless of the timing of the 70th event, we still anticipate that the readout for interim analysis will occur at the end of second quarter. With NeuVax we also anticipate our first look at the data from our HERCEPTIN plus NeuVax or H&N file in the fourth quarter this year and also expect to present additional data on earlier stage GALE-301, 302 and GALE-401 program. Moving to Slide 26, our immunotherapy programs have proven the ability to generate tumor specific T-cells and have made a significant difference for patients in early stage trials where there are currently no approved therapies. As you can see on the right side of this slide, there are numerous cancers that express HER2 and our potential candidate for NeuVax as we look to broaden the clinical footprint of the program. As many of you know, I liked in all of my presentations on Slide 27 this is first patient in or PRESENT trail and is a constant reminder on what we are working for everyday to see if we can help women with break cancer to prevent or delay the recurrence of their terrible disease. We will open the call for questions.

Thank you [Operator Instructions] Our first question is from Joe Pantginis with ROTH Capital Partners. Your line is open.

Hey guys good afternoon, and thanks for taking the question. Mark, before I ask my two questions, I just wanted to offer and the company my kudos, because you have to overcome a lot of very difficult issues in 2015 and I just wanted to say congrats on being able to get them behind you as this point. So my first question is a bit overarching, with regard to the PRESENT study obviously this is a very long study. So with that said I would like to focus on the control arm, is there anything that might you to pause at this point with regard to any changes in the treatment landscape or the support of care landscape that might potentially affect your assumptions for the control arm?

Hi, Joe this is Mark. Let me take the quick look at that then I'll turn over to Bijan to make further comments. First of all, thank you for your comments and congratulations, deeply appreciate it, my thanks to the management team here that I think is an excellent group of folks pulled together here around the table and as well support from our Board in a number of strategic initiatives last year, so I appreciate that. On the control arm, let me just say that the HER2 1+/2+ women really have no standard of care treatment other than go home and watch and wait. Those that are hormonally positive may get hormonal treatment, but other than that there is really no other treatments for them and that treatment paradigm really hasn't changed much in the decade or so. The advent of HERCEPTIN another HER2 directed therapies also directed at the three plus patients of the HER2 positive patients, but really nothing for the HER2 negative patients.

Yes I agree Mark, even if there anything like for example a better compliance or some degree that some cases could made, those would make minimal impact on underlying assumptions of what the controls breach should be. And within our patient population when we are looking across through the characteristics, we do not find any reason to think that our overall general population has a lower risk. Of course this study is blinded, we don't know who is in the control group, but we believe that the patient population is pretty much representative of what assumption was made at the beginning.

That’s very helpful to hear and good to hear, thank you very much and then I just want to ask quickly with regard to your comments on assets beyond NeuVax. I don't want to say back burner per say, but if you just focus on 401 as an example, the study or the clinical data to-date have at least in my opinion delivered what I think you wanted to get out of it. So on your statement with regard to exploring option at looking at different scenarios, are you able to add any more colors to that?

Well, of course our Phase II is ending, people are very much in to thinking within their themes and goods as to what is the next step and unfortunately I'm not able to disclose about all of our options. But I can say that there are some very viable options and very much scientifically and clinically kind of at back. And I think that the drug has its own potential, just thinking about the fact that has a different PK and the fact that it can offer different safety profile in this group, I think that is some good opportunities to explore I guess.

So I’ll just stretch that one extra second, so here we are talking about clinical options or clinical path forward I guess, I would throw into the mix, are they potential of business development scenario as well?

Joe we are certainly working on that, our business development actually Joe the Saga is very active across the range of our products and GALE-401 is certainly one of those on his active slate.

Okay. Guys thanks a lot.

Thank you.

Our next question is from Jason McCarthy with Maxim Group. Your line is open.

Hi guys, hi Rene. Mark I kind of want to build on what Joe’s first question and you said that these women really go home and they have to either watch and wait, there is not a lot standard of care therapy, but there are some that are hormone sensitive, so they can take some Tamoxifen, they can take maybe Reloxaphine or something else. My question is in the drug arm, in the NeuVax arm, those drugs and other chemotherapies have been shown to impaired dendritic cells. Particularly Tamoxifen can shutdown dendritic cells that are expressing estrogen receptors and I wonder if that something just medically or scientifically you guys think about when you are starting to interpret your data, just from variability in DFS in some of the patients that are treated versus placebo and maybe how do you think about that?

Yes. Thanks, Jason. It's a great question. When you look at overall background of dendritic cell activation, although there maybe some data regarding some reducing the activation of the DC in absolute, here we are looking at the background of NeuVax and this technique have been used previously and there were group of patients who were on those hormones. So here we are looking at the overall clinical benefit in the population that has been defined previously within the previous trials, even though we can believe that there may be some reduction activation of DC or dendritic cells in those people. I think that that has been I mean the way that we made our assumptions that has been accounted for. And we don't really know how much this is true in our population, but we can assume that they are some equalizing factors between the two groups that existed previously with the previous trial as well. So the assumptions are based on the cumulating of the factors including that those patients maybe on the hormonal therapy

Okay, great, thank you and can we just review that some of the non-cash charges that you are expecting in the first half because it says they should go away that was my understanding, I might have missed that point a little bit earlier, can you just review the charges associated with the discontinue in operation?

Sure, Jason this is John Burns. Just to wrap up, it’s always the payout of some of our commercial operations as far as the obligation for channel in this floor that we had for a period through the APAs of the buyer and then as well we paid our severance in January to the commercial sales force that didn’t move on to one of the purchasers as well. So it’s just a fee and brokerage fees behind them as well. So it’s just a few wrap up expenses that will trail on the Q1 and we do expect that to wrap up by the end of Q1 and then the other non-recurring expenses have been disclosed publically as far as the settlement of our derivative and cost action law suits that payout will be in Q2 of this year. So those are the main large non-recurring expenses we expect in the first half of the year.

Okay, great. Thanks guys.

Our next question is from Ren Benjamin with Raymond James. Your line is open.

Hi good afternoon, guys. Thanks for taking the questions. I guess just thinking about the interim analysis I know in the past that you guys talked about maybe the powering assumptions to the entire study and thinking about a recurrence rate of 23% on a control and 15% on treatment I think that's what I have in my notes. Can you give us maybe some sense as to what kind of assumptions are going into the interim analysis and I guess where I'm going with this is, is that possible or have you put it into the calculations some sort of analysis that prevents you from sort of stopping the study of feudality too early. Maybe 70 events is just not enough to see a separation in the curves. Just any sort of additional details you might be able to provide.

Thanks Ren. yes you are right about the original assumptions and when we looked at the rate of occurrence right now although we cannot say lets group what is the tripping assignment. The overall rate of occurrence is very much in line in what has been expected previously. So we have all the reasons to believe that we are on track for that and I'm not sure if you had any additional questions, but I should say that as far as the assumptions are concern within the interim analysis we do not expect at least with the numbers that we have that those to be wrong. The interim analysis itself of course consists looking at separation of the rate, difference of the rate between the control group and the treatment group and within that knowing that certain time has passed, but the study is not over. Looking at that separation to calculate the probability of this study of succeed. And that hurdle have been fixed at 15% which is called a conditional power and that conditional power is very much low hurdle, we do not anticipate any problem there at all.

Okay. So just so I understand, the conditional hurdle needs to be met if it's underneath of that then it's considered to feudal.

So Ren if it's below that there is another series of calculations that the IDMC will do and again the IDMC does not actually call the trial feudal or not feudal, they will simply make the recommendation to us. And then it's up to us to review their recommendation, their analysis, the data, additional data in the end it's our decision on whether the trial is called feudal or not. Thought for feudality.

Got it, okay. Maybe just related to it, in this case we are looking at Disease Free Survival, way back Ryan for some of us old timers, we remember when potential vaccine studies may not have shown a disease free survival or progression free survival benefit the then went ahead and showed an overall survival benefit. Any thoughts on that kid of the occurrence which seems to happen with cancer vaccines and how you might follow some of these patients for overall survival?

Ren. Yes, thank you. This is a very interesting question of course it’s a hypothetical situation and you cannot really 100% answer about how about we would be doing hypothetical. However, I can say that this is one of the reasons Mark mentioned that although for the primary in unlikely case that the primary end point may not survive. Sometimes the overall survival may be and then in those conditions of course you look at your trial and decide if that's something that could be successful. It can help the patients, but the benefit is really related to your drug and those are the nuances that happen later that would be a little bit too early to discuss about all the scenarios that can happen. That's why the results of the IDMC analysis is really a recommendation and not an order.

And Ren let me just comment as well overall survival is the secondary end point in the trial, we are following these stations for a total of 10-years, but recognize at the mortality rate is relatively quite low in these patients and so to really find a meaningful statistical endpoint NeuVax is probably not very likely and probably going to be hard to glean a signal this early at 70 events and the trial for [indiscernible] versus DFS.

Fair enough, maybe just two more questions. One on the DCIS trial. You mentioned that you are looking at immunological endpoints and I guess my confusion here is why not more hard clinical endpoints for which the base of registrational study off of.

Absolutely. First of all let me say that you get a start from somewhere and here we have immunological endpoint of course the [indiscernible] as the prime agent, but however we also have some clinical pathological endpoints which we look at the presence of the cancer cells in the resection surgical specimen. And as we go along we are going to analyze those things and this is just the beginning, 48 patients and we're working with incredible institutions including M.D. Anderson, National Cancer Institute on this one. People are very interested in something that comes in and prevent those patients to get radiations, surgery sometimes even more aggressive treatment. So this is very important to have something that’s safe to be used over the longer term and in that context I think that having those clinical endpoints are very, very important. However, that would need many patients and we need some opening and some reasons to go in a larger trial.

Yes, Ren this is Mark. I think Bijan - that last comment I think is very critical to the answer. This is an NCI sponsored trial and to a great degree some of the design was triggered by NCI given its DCIS, I think it has some of the same issues around it that a adjuvant trial does, which is long end points and it would be very hard to construct the small trial at this point in time with a meaningful clinical outcome. So the next trial is probably going to have to reasonably large which I guess calibrating the effort here of getting some robust immunological endpoints to give to the government or the NCI, a lot more confidence to jump into a much bigger trial.

Got it, okay so we should be thinking there is a much bigger trial going forward it's really going to be off of paradigm not necessarily a corporate study.

To be determined, they have a very high degree of interest in moving forward in this - moving towards primary prevention and so I think we've not had explicit discussions, there is no commitment on either parties from that. I would like to think with successful outcome of this trial they would be highly interested and highly motivated to continue this work to continue to move back to the primary prevention mode.

Got it, just is one final question you mentioned 301 and 302 and we would see some data this year, can you give us a sense is this more of a second half of the year data presentation or could be it ASCO and related to that will there be any data at AACR or San Antonio Breast this year?

Yes, we are going have those data available, part of this will be at ASCO and a part of it would be in AACR as we go along. And by the end of this year, our plan is really to have the two year DFS data for the 301 and specifically with the booster, because we have that data coming up as well. And looking at to present supported dosing and immunological data under both programs.

When we submitted the [indiscernible] once we get finalized acceptance we will let you know exactly what will be at which conference.

Got it, great. Thanks guys and good luck on the interim.

Our next question is from Rahul Jasuja with Noble Life Science. Your line is open.

Hey guys just one question for me on the present study. So my question pertains to the stratification of the patients subsets and I think I probably should have known this answer, but it's been a while since I looked at a study in detail. You've got patients who have different tumor grades and you've got patients who are ER negative and ER positive and hormonal therapy is allowed as a background therapy. In the event that the trial doesn't read just statistical significant value, but you've got say - ER tumors are more likely to reoccur in this subset, but ER positive tumors are different in that case and you have statistically significant efficacy that's perceptively defined that subgroup of ER positive. How would clinical and [indiscernible] events be played, because can't run another new trial which is ER positive tumors, how do you do that?

Yes Rahul, a great question actually this is one of the development question that comes up. Almost in most oncology trials when you have some stratification and we are happy that we have that stratification, so in case one of those point turn out to be really critical for the effect of vaccine for example you mentioned the hormone positivity. That's a very interesting scenario, so we have all the ER studies that make sure [indiscernible] that’s not a statistical significant, but then you have a subgroup which is coming the stratification which shows a significant improvement or effect. In those situations if there is very important unmet need and you are first in class for example, you have some great - like all of them are the case here for NeuVax in adjuvant therapy. The FDA and all the regulatory as a matter of fact would probably deeper disclose to discuss with you, is to whether they can give you a marketing authorization pending a specific trial a confirmatory trial in that specific group. So it's called basically accelerated approval. So you can explore those situations in case you have a group of patients who show a very important improvement.

And I guess, given the fact that this is really a wait and watch for these patients, there is nothing else they are taking, it would make more compelling sense for the FDA to do that then.

Absolutely, I mean we are guarding our subgroups and they have done how they are, we have a close watch on all of them and we are gathering those data because these are critical for the reasons you mentioned. And we are absolutely are very adamant as to having that data quick, so in case we have some positive data in group that we can recognize, identify and qualify them very quickly.

Okay guys that's all I had. Thank you.

Sure.

And our last question is from Vernon Bernardino with FBR & Company. Your line is open.

Hi guys thanks for taking my question and congrats from me also as you know, I have been watching your progress for some time now and the struggle though the past two years now have been tremendous and you have gone a long way. My only question is have to deal with at least something that's not in my model, so to me the result of the rational studies with NeuVax gastric cancer, I know it's a Dr. Reddy's collaboration and perhaps they have control over the comeback of the study. Just wondering what are the next steps there and what would you see as, how Dr. Reddy's could proceed with a study there given the fact that not really any R&D focused type of organization?

Well, Dr. Reddy's we have evaluated and we have looked at what they do and actually they have been known for many different things and they have gotten into clinical trial for a while and they have several clinical trials they are running across with different companies. So that's one thing and then you mentioned the result of the observation of study that we have in gastric cancer that study was critical for us to know, but the patient that we are going to include in that specific study, what is the overall pool of patients who was qualifying. That would include for example the HER2 positivity as well as HLA A2 plus and A3 plus. So when you look at this population, at least a quarter of them will qualified for that. Given the incidence of gastric cancer, especially in India and overall in Asia we see very high and that’s probably because of the very strong incidence of H. pylori in those population than gastric cancer secondary to that infection. We think that 25% is going to be a very sizable population to include in that study.

Vernon, I think maybe another answer to your question or another point you are making with your question. So first of all, the part of the slowness in getting started is not really Dr. Reddy's, it's a Indian Regulatory Authorities there. I don't know if you have worked with any companies that run files in India, but in last five or ten years, India has become much slower getting trials started, especially where the agent maybe coming from outside of the country. And so we are making progress there. Dr. Reddy's has been working very hard with the regulatory authorities there and we've cleared a couple of operational administrative hurdles, so we're optimistic we'll get started later this year. Dr. Reddy's actually does run a number of trials has run and is running a number of trials and while they are not known as a branded company, they do in fact have a number of program products that they run in India and they are working towards moving a little bit more in that interaction. So they have experience, they certainly know how to do it, we've got a joined operations team that we need on a regular basis. So we're very familiar with their group and the folks that are doing the work and we've got a lot of confidence in them. I would again reiterate that the issue is really more on the regulatory and the governmental side and the speed at which the bureaucracy moves more so than with Dr. Reddy’s.

Yes, unfortunately I understand a little bit about the bureaucracy, because as you would probably know at this day and age with such a large and growing epidemic [indiscernible] they still don't even have all the types of insulins that we have. I'm excited mostly because that's the numbers we have, 35,000 new cases of gastric cancer a year and 25% of the population certainly from suffering that maybe eligible for the Phase II that is a huge number and look largely the progress there and congrats again on all what you have overcome in the past two years.

Yes, well one of the things that we hope to do is, as you know H&N trial, we're also looking at HLA A24, 26 patients. Should we get positive data out of that, it’s certainly my expectation that I would hope that would translate to gastric and of course we would have to do that experiment, but that would allow us to potentially expand that patient population considerably. So again under the guidance of the supportive trials that are looking to expand the potential for NeuVax expanding to that population is certainly one of the key steps.

Yes. Looking forward to the progress. Thanks again for taking my questions.

Great. Thank you Vernon. Okay. I want to thank everybody very much for your attendance and the questions. And look forward to talking to everybody next quarter.