Tony Ramos - VP & Chief Accounting Officer Vijay Samant - President & CEO Anza Mammen - VP, Clinical Vaccine Igor Bilinsky - SVP, Corporate Development.

Reni Benjamin - HCW.

Welcome ladies and gentlemen to the Vical Incorporated Financial Results Conference Call. [Operator Instructions]. I will now turn the conference over to Mr. Tony Ramos, Vical's Vice President and Chief Accounting Officer. Please go ahead, sir..

Hello, everyone. Welcome to our fourth quarter 2014 financial results conference call. Joining me on the call today is Vical’s President and Chief Executive Officer, Mr. Vijay Samant and Vical’s Senior Vice President, Corporate Development Dr. Igor Bilinsky and Vical's Vice President, Clinical Vaccine, Dr. Anza Mammen.

I will begin with a brief notice concerning projections and forecasts.

This call includes forward-looking statements, including financial expectations and projections of progress in our independent and collaborative research and clinical development programs that are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks set forth in Vical’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission as well as the specific risks and uncertainties noted in Vical’s news release on its fourth quarter 2014 financial results.

These forward-looking statements represent the Company’s judgments and expectations as of today. The Company disclaims any intent or obligation to update these forward-looking statements. Now, I would like to introduce Vical’s President and Chief Executive Officer, Mr. Vijay Samant..

Thank you, Tony and thank you to our participants who are joining the call. First I'm pleased to report that all our indecent and partnered programs are proceeding according to plan and as Tony will report later on we have continued to manage our financial expenses as such that the company is well positioned to continue our plan development efforts.

On the call today, Dr. Anza Mammen will give you an update on our independent herpes simplex II therapeutic vaccine program. Dr. Larry Smith unfortunately is traveling so I invited Dr.

Igor Bilinsky who manages our alliance with [inaudible] to discuss the stats of ASP0113 our CMV therapeutic vaccine partnered with Astellas and our Ebola collaboration with AnGes. We will begin the call with a review of our financial results by Chief Accounting Officer, Tony Ramos. Tony you’re on..

Thank you, Vijay. We reported financial results this morning for the fourth quarter 2014 which reflects tenured advancement in our HSV-2 program as well as an increase in our collaborative efforts related to our CMV program license to Astellas.

Revenues were $4.8 million for the fourth quarter of 2014 compared with 3.1 million for the fourth quarter of 2013. The increase in revenues is primarily the result of an increase in the development work performed on our contract with Astellas related to the ASP0113 vaccine program.

The net loss was 4.6 million for the fourth quarter of 2014 compared with 2.2 million for the fourth quarter of 2013. The increase in our net loss compared to the fourth quarter of 2013 was due primarily to increased expenses related to our HSV-2 program.

I'm pleased to report that our cash burn for the fourth quarter 2014 was 2.7 million compared to 5.5 million for the fourth quarter of 2013. Our cash burn for the 12 months of 2014 was $10.3 million. We ended the year with $49.1 million in cash and investments. For 2015 we are projecting a cash burn of between $12 million and $15 million.

I will now turn the call over to Dr. Mammen..

Thank you, Tony. Our HSV-2 vaccine is a therapeutic vaccine designed to reduce viral shedding and reduce genital lesion recurrences in HSV-2 positive subjects. The burden of HSV-2 is highlighted in January's Plus 1 [ph] publication by [inaudible] that provides updated estimates of the prevalent and incidences of HSV-2 globally.

It estimates that in 2012 there were approximately 400 million people worldwide between the ages of 15 and 49 already infected with HSV-2 and that in 2012 an additional 19 million people became newly infected with HSV-2.

Africa followed by the Americas have the highest prevalence, these data affirm the continued high global burden of HSV-2 and the commercial potential for a therapeutic intervention. To address this major health problem we continue to make progress in our Phase 1/2 trial evaluating Vical's therapeutic HSV-2 vaccine.

Enrollment of subjects was completed in December and all vaccinations have now been completed. The proof of concept efficacy analysis will involve over 140 subjects. As a brief reminder each subject performs 60 days of daily self-swabbing prior two and following three dose vaccination.

We will compare the genital viral shedding rates within each vaccine group to determine the impact of vaccination on shedding. The trial is sufficiently powered to detect at least a 30% reduction in HSV-2 viral shedding as the primary end point.

We’re targeting to deliver top line efficacy data in mid-2015 assuming we demonstrate a favorable reduction in viral shedding, we will review a pivotal Phase 3 trial designed with FDA at an end of Phase 2 meeting. In summary our HSV-2 clinical trial is proceeding according to plan. I will now turn the call over to Dr. Igor Bilinsky..

Thank you, Anza. I will begin with a clinical update on ASP0113. This is our therapeutic CMV vaccine that’s undergoing clinical development with our partner Astellas Pharma. It is designed to prevent cytomegalovirus or CMV infection and associated complications in transplant recipients.

It is the first CMV vaccine to reach phase 3 and it is the first DNA [ph] vaccine to reach Phase 3. ASP0113 has orphan drug designations in the U.S. and in the Europe. The vaccine is undergoing testing in two major clinical trials. The first one is a global pivotal phase 3 trial in hematopoietic cell transplant recipients or HCT.

The second is a global Phase 2 trial in solid organ transplant recipients or SOT. The Phase 3 HCT trial will enroll a total of 500 CMV seropositive HCT recipients at approximately 85 clinical sites in the U.S., Europe, Australia and Asia.

We work with Astellas to design this adapted Phase 3 trial that includes overall mortality as a standalone primary efficacy endpoint or as part of a composite endpoint. The primary endpoint will be determined based on one year of follow-up from the first 100 subjects in the study and then data from the remaining 400 subjects will determine efficacy.

This endpoint has the potential to support full approval in key markets with no post approval trial requirements. The endpoint selection and trial design were based on a thorough analysis of the Phase 2 data and extensive consultations with key opinion leader and regulatory agencies in the U.S., Europe and Japan.

The scientific rationale is twofold, firstly as published in literature transplant recipients who are CMV seropositive have 20% to 30% lower overall survival than those who are CMV seronegative. The slower overall survival is attributed to indirect effect of CMV and it is not impacted by the CMV anti-virals.

A vaccine may offer an ideal strategy for improving survival in these patients. Secondly in the previously completed 80 subject Phase 2 study the results of which were published in once [inaudible] in 2012 there was a trend of approximately 30% lower overall mortality in the vaccine arm compared to the placebo arm of the study.

While their difference in overall mortality was significantly in Phase 2, the Phase 3 has been designed and powered to demonstrate the statistically significant difference in overall mortality for as part of a composite endpoint. The enrollment of the Phase 3 is progressing and Astellas expects less subject to be enrolled in late 2015.

Astellas is also actively recruiting into Phase 2 trial in SOT recipients, that trial is enrolling subjects at approximately 80 centers in North America, Europe, and Australia. The trial is a randomized double blind placebo control study that will enroll 140 CMV seronegative patients who will receive a kidney transplant from a CMV seropositive donor.

This SOT group namely donor positive recipients negative or D+/R- [inaudible] risk for developing CMV viremia [inaudible].

The standard of care for this group is typically 100 days of [inaudible], in this current Phase 2 SOT study all subjects will be receiving 100 days of [inaudible] and will be randomized one to one to also receive five doses of either ASP0113 or placebo. The primary end point of the Phase 2 SOT study is incidences of CMV viremia.

We’re encouraged by the rate of subject recruiting exceeding expectations in the Phase 2 study. Astellas now expects the trial to be fully enrolled by mid-2015. Further details about both of this trials are available on clinicaltrial.gov. It is important to point out that these two CMV vaccine trials are being conducted and fully funded by Astellas.

Our support for these trials including manufacturing, regulatory and clinical support activities is fully reimbursed by Astellas. Let me also add that we together with Astellas are gearing up manufacturing and scale of activities in anticipation of commercial launch of ASP0113.

If clinical development is successful we expect that Vical will be responsible for producing bulk drug commercial supplies at our manufacturing facility in San Diego. This is an exciting time as we advanced our potential licensing the first CMV vaccine for human use.

In summary we’re very pleased with our working relationship with Astellas who have significant commercial experience in the transplantation field and is an excellent partner for our CMV vaccine program. Now a brief update on our Ebola collaboration with AnGes. Although the Ebola outbreak in West Africa is subsiding the threat of resurgence remains.

There is an unmet need for an effective treatment for this dreadful disease. Unfortunately after so many decades of intermittent Ebola outbreaks there are no licensed treatments or vaccines. Our treatment strategy maybe one such method to reduce the substantial mortality rate of Ebola virus disease.

In January of 2015 we announced the plan to work with our longtime partner AnGes [ph] of Japan to develop equine or polyclonal antibodies against Ebola virus as a potential treatment for Ebola virus disease. We created the DNA vaccine in coding the glycoprotein antigen over 2014 the Ebola strain [ph].

This DNA vaccine is formulated with Vical's proprietary adjuvant Vaxfectin to generate antibodies against the Ebola glycoprotein after vaccination of horses. The resultant equine polyclonal antibodies can be purified and potentially used to treat Ebola virus disease in humans.

Equine immunoglobulins has been used as treatments for various bacterial toxins for rabies virus as well as various spider, snake and scorpion toxins.

Under the terms of this agreement Vical is responsible for delivering the Ebola vaccine construct for horse immunization and AnGes will responsible for development, testing and commercialization of the equine polyclonal antibody therapy in Japan. AnGes will manage this program and will be responsible for all development cost.

We’re also pleased to inform you that we’re working with a French biotech company Fab'entech who specializes in the production of highly purified equine polyclonal immunoglobulins against toxins and infectious pathogens if core technology was licensed from Sanofi Pasteur.

Fab'entech is working with the world health organization on developing purified equine polyclonal antibodies against Ebola virus and Vical provided proprietary DNA plasmid backbone to Fab'entech under a material transfer agreement for the development and production of equine polyclonal antibodies against Ebola.

Fab'entech will manage this program is responsible for all the relevant process. I will now turn the call back to Vijay..

Thank you, Igor. In summary all our clinical programs continue to advance according to plan. We completed enrollment in all vaccinations in our Phase 1-2 trial of our vaccine for HSV-2 and the data releases and target to occur by the middle of 2015.

Astellas expects complete patient enrollment in it's Phase 3 trial of ASP0113 in stem cell transplant recipients in late 2015. The ASP0113 program in solid organ transplant recipients is recruiting well. Astellas has recently accelerated the expected trial completion data such that the last subject enrolled will be mid-2015.

That concludes our prepared comments today. Operator we’re now ready to open the call to questions from my invited participants..

[Operator Instructions]. And our first question comes from Steven Willey with Stifel..

This is [inaudible] on for Steve. I got two, so first one do you intend to conduct a dose ranging Phase 2 study for HSV-2 program or do you intend to go directly into a pivotal Phase 3 study and also second one, do you -- would you provide T-Cell response data along with the viral heading in mid-15 or just shutting o the lesion data? Thank you..

At this point we’re going to continue the current Phase 1/2 trial and evaluate all the data and our plan is really to go to FDA for an end of Phase 2 meeting and propose a Phase 3 trial. We do not anticipate a need for doing any further dose adjustments..

And the reason simply because you know we are the highest dose that we have been able to put into viral with the optimum amount of -- expected so there is no dose ranging as opposed to some of the other players in this field are doing all kinds of dose [inaudible] titration.

If this data from our current Phase 1/2 study looks good that’s the construct that’s going to go into Phase 3. Regarding your other question as opposed to -- we’re indeed gathering all immunological samples and we’re gathering all the data.

We haven't exactly decided what's going to be presented in the top line data because we want to make sure we present sufficient data to get key people interested but at the same time present or publish the data assuming it is good in an appropriately publication or an important forum as you know.

[Inaudible] both coming to San Diego this year and those could be potential targets for us. Obviously there are deadlines to meet in terms of submitting abstract so all those are under consideration but yes we will be gathering immunological data at some point that all the data will be available..

If I may squeeze one more question, are you collecting swabs at six months and 12 months' time point to check for the durability or is it just post-vaccination swabbing? Thank you..

So we actually have three swabbing periods, we have one pre-vaccine, we have another 60 day period immediately post-vaccine and then yes we have a third 60 day swabbing period planned for at the end of the trial so that is designed to assess for the durability of the effect that we see in the initial two swabbing periods..

That will be six month or 12 month? The last one..

Right. The third swabbing period will begin six months after the second swabbing period. It's about nine months. So in the end of follow-up period is one year after the last dose and so that third swabbing period at that same time..

[Operator Instructions]. We will take our next question from Reni Benjamin with HCW..

I jumped on the call late so I may have missed this but when Igor was talking about the 500 HCT patients which are expected to complete enrollment by the end of 2015, did you mention that there was an analysis that was supposed to occur after the first 100 patients and if I heard that correctly would that be happening pretty eminently? Can you just give us help me clarify what I may or may not have heard?.

So the plan is -- the trial is an adopted design trial, it will enroll a total of 500 subjects and the trial is composed of two stages, the first stage is 100 subjects the second stage is 400 subjects.

So the primary end point will be determined based on one year of follow-up data from the first 100 subjects and then the remaining 400 subjects data from that cohort will determine efficacy..

If I'm just kind of thinking about a typical enrollment curve let's say and with the enrollment of the total 500 happening at the end of this year, is it possible to get the primary end point from the first 100 patients by the end of this year as well?.

So we will be discussing Astellas what information will be publically announced and what will not be and so in parts of competitive reasons and for part for confidentiality reasons we cannot comment on this right now but we will communicate as much as we can when time comes..

But you’re on the right logical path if I may say so..

And then just kind of following at, do you need the complete 500 patient data set to go to the regulatory authorities or can you move forward with just the 100?.

So the trial was designed in lot of discussions with FDA, EMA and Japanese regulatory authorities and the design is to use data from 400 subjects in the second stage to apply for registration..

The 400 component is the efficacy component, the first 100 patients are really the adaptive portion to see if we need to make any adjustments in the end point of the study.

So yes you need those 400 patients data to go and file for registration but you need 100 patients data to decide whether you want to change or make any changes to the end point or bring a composite end point.

Did I answer your question?.

Yes it does. And I guess just one final one on the HSV-2 vaccine platform, data by the middle of this year. What is the primary endpoint for the study and kind of based on where other therapeutics have been reporting their results.

Can you give us maybe some color as to what you would consider as a threshold for a go, no-go decision or does that even apply?.

First of all the trial designed, our power to show a 30% reduction, okay in the shedding rate. If we show anything 30 or more that we have met statistical significance and based on our discussions with KOL that’s a pretty substantial reduction which translates -- will hopefully translate to an important clinical benefit.

So when you start comparing other people's data, you’re comparing apples and oranges simply because people are using different assay methodologies and things of that sort.

As we remind everybody all the assays that we’re doing for shedding by PCR at University of Washington and some people consider that as a gold standard of PCR in terms of how the assay has been validated and developed over the years. So we’re doing all the assays in University of Washington.

So I think when we come out with the data and we show statistical significance that’s a good indicator that we have met clinical benefit hurdle as people defined it..

And if there are no further questions I will now turn the call back to Mr. Samant..

Well thank you all for participating today. We look forward to continued progress in our development programs and to meeting with some of you at our upcoming conferences. Thanks again..

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