Novavax, Inc. (NVAX) Q4 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Novavax Fourth Quarter and Full-year 2015 Financial Results 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 is being recorded. I would now like to introduce your host for today’s conference, Ms. Andrea Flynn, Senior Manager of Investor Relations. Ma'am, please begin.

Thank you, operator. Good morning. This is Andrea Flynn, Senior Manager of Investor Relations at Novavax. I would like to thank everyone for joining today’s call to discuss our fourth quarter and full-year 2015 financial results. A press release of our earnings is currently available on our website at novavax.com and an audio archive of this conference call will be available on our website later today. Joining me on today’s call is Novavax’s President and CEO, Stan Erck; together with our Senior Vice President of Research and Development, Dr. Greg Glenn, and Chief Financial Officer, Buck Phillips. Before we begin our prepared remarks, I need to remind you that we will be making forward-looking statements during the teleconference that could include financial, clinical or commercial projections. Statements relating to future financial or business performance, conditions or strategies and other financial and business-related matters, including expectations regarding revenue, operating expenses, cash usage and clinical developments and anticipated milestones are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. I will now turn the call over to Stan.

Thanks Andrea and good morning, everyone. We are pleased to be on the line again today to review another eventful quarter for Novavax. Demonstrating our team's continued execution during the quarter, we participated in two End of Phase 2 meetings with the FDA and subsequently initiated two pivotal Phase 3 trials of our RSV F Vaccine. As far as this named Resolve is a trial to demonstrate protection against RSV in older adults and the second named Prepare is a trial to demonstrate protection of infants via maternal immunization. I'd like to point out two recurring things in Novavax that we've demonstrated over recent years. First, we continued the use of breakthough science to create new vaccines and second, we combined this with unparalleled execution. As an example, with respect to our RSV F Vaccine for older adults we recruited and vaccinated 11,850 volunteers, 60 years and older for the Resolve study in just five weeks. This allowed us to have a steady population vaccinated before the start of the 2015-2016 RSV study. We can now project the new completed study and report our first ever efficacy data by the end of the third quarter of this year. On top of this, again following our second End of Phase 2 meeting in November with the FDA, we were able to initiate our Phase 3 RSV F trial in pregnant women in the U.S. in December followed by the expansion of that trial into South Africa in January. Based on this progress, we are well positioned for significant potentially value creating data now since later 2016 and assuming positive data we expect to be in a position to file our first BLA in 2017. Also we recently strengthened our balance sheet through the successful completion of a convertible notes offering. This allows us to aggressively advance our programs to the market, maintain a substantial lead over our competitors, and to consider appropriate partnering opportunities from a position of strength. As announced earlier this year, we have initiated discussions with a number of potential partners for the ex-North American commercialization rights to our RSV F Vaccine franchise. We believe our development plans have created significant value to date. We made the decision years ago not to engage in partnering discussions until we had substantially de-risked the program in an effort to maximize the value of the asset for our shareholders. With the successful completion of the Phase 2 trial in older adults with its first ever efficacy data against RSV in any population and the initiation of pivotal Phase 3 trials we have now initiated partnering discussions as we have valuated commercial opportunities in different geographies we believe the best strategy is to accelerate product launch and maximize its value outside of North America through partnering with companies that have the existing infrastructure and experience to deliver on the promise of its product opportunities. As a recognized leader in RSV vaccine development, we remain ideally positioned to launch this product in North America. I will ask Greg to start with a quick view of our programs with a focus on our RSV F Vaccine programs and then Buck will provide an overview of the fourth quarter financial results and then finally I will wrap up and then open the line up for questions. With that agenda, let me hand the call over to Greg.

Thanks Stan and good morning everyone. I'll begin my comments with an update on our RSV vaccine program. Full enrollment of the Resolve trial, our Phase 3 trial in older adults prior to the RSV season is critical and I'm pleased to report we initiated and completed enrollment. I want to again thank our team here at Novavax and experts in the field for their dedication and hard work as the enrollment in such a rapid timeframe is a significant accomplishment. Let me remind you that RSV affects over 2.5 million older adults every year in the United States alone with an estimated annual cost burden in excess of U.S. $28 billion. According to the CFC [ph] the disease causes 207,000 hospitalizations and 60,000 deaths among adults older than 65 every year. There are also roughly 93,000 net reported interventions [ph] that are directly caused by RSV disease annually. Resolve is a randomized, observer-blinded, placebo-controlled trial [indiscernible] 11,850 adults, 60 years of age and older at 60 sites in the U.S. The primary efficacy objective of the trial is prevention of moderate to severe RSV associated lower respiratory tract disease as defined by the presence of multiple lower respiratory tract symptoms and signs. The second objective is the prevention of all acute symptomatic RSV and respiratory disease. The trial has been designed based on the Phase 2 results we have previously discussed and which were able to describe the RSV attack rate, vaccine effect, and case definitions. As a reminder, in that Phase 2 trial we followed 1,600 subjects with active surveillance throughout 2014/15 RSV season. We found that 4.9% overall instance for RSV among which1.8% moderate to severe cases were noted as mentioned by multi-symptomatic lower respiratory tract disease. We are closely monitoring several different RSV surveillance systems for the 2015/16 season and like influenza, the intensity of the annual winter time, national RSV season tends to be relatively consistent year in and year out and to date this RSV season is indeed consistent. Based on objective data from RSV allergens, CDC's National Respiratory and Enteric Virus Surveillance System, the percent of RSV positive tests is generally consistent with the 2014/15 season in the prior five years. That gives us additional confidence in the success of our trials. Given the consistent RSV surveillance previous season to last season we expect a similar instance of acute symptomatic RSV disease of over 4.9% and 1.8% from our severe RSV. As a reminder, in the Phase 2 trial we observed 41% vaccine effect on ITT [ph] populations against overall RSV elders has a 64% [indiscernible] against moderate to severe RSV associated lower respiratory tract disease. The Resolve trial is well designed with a greater than 90% [indiscernible] for the prime objective and 85% [indiscernible] for the secondary objective. Because we are using the same surveillance methods and analyses of detectable viruses used in the Phase 2 trial, we expect to reproduce CFC [ph] data in our Resolve trial. With enrollment completed on time we still expect to report top line results in the third quarter of 2016. We will use this data to support our BLA application we plan to file in 2017. We also initiated Phase 2 rollover clinical trial of our RSV F Vaccine in older adults during the quarter. This trail was a randomized, observer-blinded, placebo-controlled trial designed to enroll the same adults 60 years of age and older which we anticipated in the Phase 2 trial. We have successfully completed this trial with 1,330 older adults. The primary endpoints of the trial were to evaluate the safety in serum anti-F IgG antibody concentrations in response to re-vaccinations after RSV season. Results of this trial are expected in the second half of 2016. We think safety data from this trial will support discussions with regulatory agencies at the meeting as we seek a recommendation for annual seasonal vaccine in older adults. Moving on to our RSV program for infants via maternal immunization, we initiated enrollment in a global pivotal Phase 3 clinical trial known as Prepare during the fourth quarter ahead of guidance. As a reminder, RSV is the most common cause of lower respiratory tract infections and is the leading viral cause of severe lower respiratory tract disease in infants and in children worldwide. In the U.S. RSV is the leading cause of hospitalization in infants and globally second only to malaria as the cause of death in children under one year of age. In spite of the induction of post infection mainly repeat infections and lifelong susceptibility to RSV is common. Prepare is a randomized, observer-blinded, placebo-controlled trial that utilized group sequential design, RSV flexibility [ph] in trial site that is responsible to the rate of endpoint advance [ph] and evolving evidence of efficacy while maintaining trials of blind integrity. Roughly eventual sample size may vary between 5000 and 8255 pregnant women over a period of two to four years. Participants are being batched in at a number of global clinical sites and advanced each RSV season. The primary objective of the Prepare trial is to determine the efficacy of maternal immunization with the RSV vaccine against symptomatic lower respiratory tract infection with hypoxemia in infants through the first 90 days of life. We believe that maternal immunization offers the optimal way of protecting young infants who are among the most susceptible populations to RSV disease. We are also pleased that the FDA granted Fast-Track designation for this program in 2014 which we believe validates a significant unmet need in this population. As a reminder, Novavax was awarded a grant of up $89 million from Bill & Melinda Gates Foundation to support development of this RSV F Vaccine for infants via maternal immunization. As you can imagine, majority of our resources are currently dedicated to our RSV F Vaccine Phase 3 trials. However, we are continuing to develop our RSV pediatric clinical development plan and expect to provide additional guidance in the second half of this year. Now with respect to our influenza program, we previously reported positive results in the Phase 2 clinical trials or dominant [ph] quadrivalent seasonal and pandemic influenza vaccines. As a reminder, our influenza programs are being conducted under the company's contracts with our partner BARDA. We are continuing to complete review of these data with our partner BARDA to determine the path forward for both influenza programs. We expect to continue discussions with BARDA and present plans for continued clinical and product development over the next several months. We also continue to work on plans for conducting a clinical trial with the new combination respiratory vaccine that will combine multiple strains of our seasonal flu vaccine with our RSV vaccine. We anticipate initiating a Phase 1 trial with healthy volunteers in the first half of 2017. I would like to say a brief word about the Zika virus. As you all know, we have demonstrated our unique expertise of our technology platform for the rapid development of vaccines against emergency threats. We also have unique experience in vaccine development for women of child bearing age which may be important with the zika virus. Although we have not formal plans we want to be on preliminary discovery efforts we have initiated the early state zika vaccine program with the goal of rapidly progressing through animal studies and some early process development activities. We will work with various government and non-government groups to determine the pathway forward to fund our large scale production and clinical trials. With that update of our key programs, I will now turn the call over to Buck.

Thank you, Greg and good morning everyone. Today we announced the financial results for the fourth quarter and full year ended December 31, 2015. Summary financial statements can be found in today's earnings press release. My comments today will focus on three topics; a note on the presentation of the statement of operations, the financials for the fourth quarter of 2015 and an overview of our recent convertible note offering. Let me start my comments by noting that we have updated our statement of operations reporting format in both the press release and the 2015 10-K to be filed with the SEC in order to conform to biotechnology and pharmaceutical industry financial presentation standards. In prior financial reports we have included an expense line item titled cost of government contracts revenue. These expenses consisted of certain reimbursable R&D costs incurred under our contract with BARDA and related to the revenue line item titled Government Contracts. While Novavax has reported these expenses separately in the past, it is not industry practice to break these expenses out of total R&D expenses and we believe it is more appropriate to classify them as R&D expenses. We will continue to comment as appropriate on material period to period variances in expenses and revenue related to our government contracts at both our quarterly earnings calls and in our SEC filings. With that background let's step into the review of the company's fourth quarter 2015 financial performance. For the fourth quarter of 2015 we reported a net loss of $78.8 million or $0.29 per share. This compares to a net loss of $31.5 million or $0.13 per share in the prior year period. The increase in net loss for the fourth quarter is primarily the result of increased R&D expenses related to the clinical trials of our RSV F vaccine candidate and higher employee related costs relative to the same period last year. I will expand on the specifics of those cost increases over the next few minutes. Revenue for the quarter was $5.9 million compared to $6.7 million for the same in 2014. This 13% decrease in revenue in the fourth quarter of 2015 is driven by the lower level of activities under the BARDA contract in the fourth quarter of 2015 relative to the level of activities in the fourth quarter of 2014 which resulted from the initiation of our base to quadrivalent seasonal influenza vaccine clinical trial in that period. The decrease in BARDA revenue is partially offset by recognition of revenue in the fourth quarter of 2015 of approximately $1.6 million under the Bill & Melinda Gates Foundation grant $89 million. The BMGF revenue is directly related to the initiation of the global pivotal Phase 3 clinical trial known as Prepare of our RSV F vaccine candidate for maternal immunization. As we look forward to 2016, we should expect a significant increase in BMGF revenue which will correlate into costs incurred in the Prepare trial. R&D expenses increased to 128% to $75.9 million in the quarter compared to $33 million in the same period of 2014. The increase in R&D expenses was primarily due to increased activities relating to our ongoing RSV vaccine clinical trials along with higher employee related expenses, which include an increase in non-cash stock compensation expense. Specifically, these R&D expenses were related to the initiation and full enrollment of 11,850 participants in the Resolve trial which was initiated in November and fully enrolled in mid December. Resolve is a primary contributor to the increase in R&D project related expenses in the fourth quarter of 2015. As you know, we also initiated a Prepare trial which also contributed to the increased in R&D project related expenses in the fourth quarter of 2015. These increases in R&D project expenses were partially offset by a decrease in influenza project expenses under our BARDA contract with BARDA. R&D employee related costs increased in the quarter relative to the same period of 2014 primarily due to the growth and headcount required to execute and support our development activities, including the Phase 3 clinical trials previously discussed. At December 31, 2015 we had 369 employees dedicated to our research and development programs versus 261 as of December 31, 2014. The R&D head count growth occurred across the board including clinical operations, regulatory affairs, analytical development, process development, quality assurance, quality control, and manufacturing. G&A expenses increased 75% to $8.9 million in the quarter compared to $5.1 million in the same period of 2014. This increase is primarily due to an increase in employee related expenses which include an increase in non-cash stock compensation expense as well as increases in pre-commercialization expenses. At December 31, 2015 we had 49 employees dedicated to general and administration functions versus 35 as of December 31, 2014. Increases in employee related expenses for both G&A and R&D were primarily driven by growth in headcount necessary to support our expanded project development activities and for maturation of the company. One key non-cash component of expense growth on year-over-year basis is the growth of non-cash stock compensation expense which increased from $6.1 million in 2014 to $13.4 million in 2015. As of December 31, 2015 the company had $230.7 million in cash, cash equivalents and investments on the balance sheet. In late January, Novavax strengthened its balance sheet with the issuance of $325 million in convertible senior notes which resulted in final net proceeds of approximately $276 million. These proceeds further strengthened the balance sheet ahead of data from the Phase 3 Resolve trial expected in the third quarter 2016 and in support of discussions for commercialization rights to its RSV F vaccine franchise outside of North America while minimizing dilution. The initial conversion price of the notes was set at $6.81 per share, representing a 22.5% premium to the last reported sale of Novavax's common stock of $5.56 on the day of pricing. The net proceeds of the offering were approximately $315 million after deducting initial purchases, discounts and commissions, but prior to deducting offering expenses. Novavax used approximately $38 million of net proceeds from the offering to purchase accounts [ph] call which will function to reduce dilution from the issuance of additional shares upon the conversion of the notes between the price of $6.81 and a cap price of $9.73 per share. The resulting net proceeds after the purchases discounts offering expenses and cap call transaction were approximately $276 million. The timing of the offering was optimized to enhance our balance sheet as we engage with potential partners in discussions for the RSV F vaccine commercialization rights outside of North America and to allow appropriate investment pre-commercial activities. Further, we believe conducting the offering in the first quarter of this year will lose any overhang from the anticipated announcement of our Phase 3 data in the third quarter of this year. Finally, we believe the timing of the notes due in 2023 falls well beyond our expectations for the timing of the RSV F vaccine commercial launch in older adults providing the future cash flows necessary to cover the obligation. This concludes my financial review. I'll now turn the call back over to Stan.

Thank you, Buck. We are incredibly excited about 2016. Complete enrollment of Resolve takes us one step closer to bringing this important vaccine to license. We're looking forward to another year of significant clinical data readouts and attaining preparations for the transmission to a commercial organization. Now I'll wrap it up and open it up to Q&A. Operator?

Thank you. [Operator Instructions] Our first question is from Jess Fye from JP Morgan. Your line is open.

Hi, thanks for taking my question. I actually have a couple of FDA [ph]. First one is on the financial side, can you help us think about R&D spend going forward? I guess, should we expect that to come second now that Resolve is enrolled or is this in the run rate? Second question, can you elaborate a little bit on the progress you've made in partnership discussions and remind us when you would ideally like to have a partnership in place, I guess should we really expect it to wait for the Phase 3 data in order to maximize value? And then finally, recognizing that the FDA has agreed upon the definition of excess for this clinical study Resolve, are there any other factors we should think about as it relates to you ultimately gaining an ACIP recommendations .i.e, just a magnitude of benefiting you play a role there when it comes to actually getting that recommendation?. Thank you.

Hi, Jess this is Buck. With regard to your first question on the R&D spend obviously fourth quarter was a big quarter for us in the R&D spend. We’ve talked many times in the past about the profile of spend for clinical trials and we usually see the majority or we see a significant percentage of the spend profile occurring in the months immediately before the initiation of the clinical trial and then into full enrolment. So, the two big drivers in fourth quarter were the Phase 3 older adult trial and then to a smaller degree the ongoing Phase 2 rollover trial and the initiation of the maternal immunization trial. All those trials were initiated and were ongoing in the fourth quarter. When we look into Q1 and Q2 of the new year, we should expect that these all three trials are ongoing and that you should expect that we'll continue to invest in those trials. As we get to the end of the RSV season, obviously those trials will start to wind down as we're in data collection mode. So I think it's fair to believe that the first quarter and second quarter R&D expenses will be in line give it a plus or minus the fourth quarter R&D. You should expect to see R&D decline actually in Q2 and Q3 as that big adult Phase 3 trial starts to wind down. Let me rest with that.

I will take the – this is Stan, I'll take the partnering question. We've thought a lot about the timing of our partnering discussions as I mentioned in my prepared speech. We wanted to get as much risk reduction and demonstration of efficacies as we could so that we could have serious discussions with the top players in the field and the top wannabe players in the field and so we're trying to get it so that we have that and we’ve enrolled Phase 3. So we think it's important to start those discussions now because we don’t want to skip a beat about entering commercial entry into non-U.S. markets. We think that the potential partners will be starting to think about how to do that and it will affect the discussions that we have and so now is the time to do that. And so that they can have an influence over the regulatory file in the non-U.S. based countries and so I think it is a good time to do that. We recognize of course that we've got informed data coming at the end of the third quarter and some people will either want to wait for that or structure a bid around the data and so we'll see how hat plays out and now is the time to start doing this and these discussions take time and as I said we don’t want to miss getting into the non-U.S. markets. And maybe Greg can answer the third question.

So, hi Jess, I didn’t hear the very end of your question, so maybe you can just, would you remind restating your third question for me?

Yes, it was basically, is it just hitting and have a positive result on Phase 3 that’s important from the standpoint of getting an ACIP recommendation and/or are how does the magnitude of benefit you demonstrate in Phase 3 factor into those decisions by that committee?

Okay, yes, thank you, that’s a good question. So I can't predict what the ACIP will think is important. I think it is obviously essential we have a good Phase 3 pivotal efficacy result and we believe that at this point that the burden of disease is so significant for us in a population that that Resolve should be able to result. We also know that they will look at cost businesses of these – we are collecting some of that data as exploratory to our endpoint to support their case. So, and the revision we are, we know other studies going on and your will [indiscernible] that will further support the constitution of vaccines. So I think those are features that will be discussed at the ACIP level and will be very important. In addition, you probably know our target product profile at this point is an annual seasonal vaccination. So this will – they were – they are gaining from the E202 trial where we're boosting the subject from E201 we think will also be quite important for them to demonstrate the immune benefit of a second dose. So I think those will be topics, obviously that is exactly what we are looking for in terms of making our plans what data will we want to be able - and be able to present ACIP and I think we have those items well in hand to value structure our data collection and how we are looking for support from keeping what we are doing at these studies, et cetera.

Got it. Maybe just a follow up on that, is it your predication that you might be able to get on the ACIP calendar to have them start looking at your results prior to an FDA decision or is that going to happen after the FDA and the regulatory cost?

Yes, that would – typically, we expect to be typical or typically follow FDA approval of our vaccine, so that we have our first milestone and then to have the ACIP involved in there.

Okay, got it. Thank you.

Thank you. Our next question is from Ed Tenthoff of Piper Jaffray. Your line is open.

Great, thank you and my congrats on just a lot of progress through the end of the year and I'm really excited about the studies ongoing. I guess my first question had to do with the Phase 2 repeat for second administration RSV study with about 80 some percent or the 1300 patients, what kind of hovering do you get with that number of patients in the study and how does that sort of help with respect to the data presentation to the agency?

Yes thanks, good question. So that is why the primary objectives there are safety and immunogenicity and so we are not expecting to say much about the vaccine efficacy because as you quite know it will probably be quite small so that we will look, but that was our expectation or we hope our general strategy is one hopes that you can describe a core of protection or relative core protection is immunogenicity. And so as we developed data for the 301 trial, we will be looking for that and that will reflect on what we see in the bursa [ph] trial. So of course we will do surveillance, we are doing surveillance. You know that we report, we did review [ph] 1330 of the subjects which for a trial of this I think is very, very good performance if these are old people and so, but we are not going to expect the surveillance rates to really change. So this will be really an exploratory objective, but we are looking for same objectives that we are in our primary and secondary in the 301 trial. But I don’t – we don’t have an expectation to be able to say definitely about the efficacy or health for example the second dose. We do hope that the immunogenicity will be meaningful in the context of core protection to be determined in the E301 trial which is obviously seized to be able to do something on htat.

Understood, that is really helpful. And then if I may just a quick question with respect to flu, obviously the focus has been RSV for the back half of last year, can you give us a little bit more color on timing and what potential outcomes are? I mean there seems to me like the seasonal endemic flu vaccines are coming up on potential registration study, so is that really what these discussions are about trying to figure out path to licensure?

Ted this is Stan. It is a combination thing, so over the past two or three years working with BARDA we have gotten to the point where last year we reported data on the 206 trial which is very good data on all four strains and but in addition both on the work of our nanoparticle vaccines for RSV and Ebola and additional data that we got from flu. We are talking to BARDA about what the pathway and licensure should be with the flu vaccine basically on what we've learnt. We are thinking about making changes to it and what those changes would have on the effect on the design of the next trials. So that is what we are talking about, we are conducting some analyst studies. We will have some data in the next month or two and we will give you a much more definitive answer at that time.

Okay, thank you very much.

Thank you. Our next question is from Bill Tanner with Guggenheim. Your line is open sir.

Thanks for taking the questions. Greg I had one for you and I probably should know the answer, but you mentioned that the RSV study is powered at 90% share efficacy with an attack rate of that you had in the Phase 2, so I’m just wondering what is actually the relationship between the powering and the attack rate, so let’s the attack rate is 4.5% rather than 4.9%, what does that do to the powering?

It does decrease the power to detect the vaccine effects and I will just say we took that into account. That is why we have powered this trial very well for both the primary and secondary and then with the primary is powered over 90% and the secondary in mid-80s. So if there is some decrease in the attack rate there is a decrease in the power to detect. And so we took that into account and that is why we in fact and probably saw we increased the sample size in our pre-FDA meeting guidance to what we actually achieved, so to make sure we were very comfortable with some variability in the RSV attack rate. But that being said, I think we've provided some guidance for RSV season is there it seems, it appears to us to be very predictable, that is certainly true this season, it looks like power season and I think that is going to be reflected in the attack rate we detect through our surveillance system.

And Greg, that attack rate or sorry that predictability, I mean that is still just based on CDC surveillance right that looking at…?

Right, right.

And so presumably the tighter the percentage of blood samples that have into RSV tighter or predictive of what the actual attack rate is kind of making sure.

Yes that relationship if you look over the past five years the national statistic for the onset and the rates of ours in our view are very consistent.

And then Stan, I had one for you just as it relates to the partnering discussions and then the commentary made about the pentavalent, how does that actually play into discussions with companies about the RSV vaccine as a standalone, I mean presumably some of the folks you might be talking to do have seasonal flu vaccines, so would it be contemplated that you might do something with a company around the RSV as a standalone as well as the pentavalent?

Yes this is a great question, of course I don’t know the answer to that yet. Obviously if there could be an interesting combo as well, so those discussions are yet to be had.

Okay, all right, thanks very much.

Thank you. Our next question is from Joel Beatty of Citi. Your line is open.

Hi good morning and thanks for taking my questions. First another question on RSV surveillance for the season, can you talk about the timing of onset of the peak season and how related to the completion of the vaccination in the Phase 3 elderly trial?

Yes hi Joel, Greg here. So we - what happens in the trial the mechanics of the surveillance starts two weeks after a subject is immunized. So as the subject is enrolled into the trial surveillance began. We did have the bulk of our recruitment done by the 1 December. We trickled into couple more weeks as we filled up the groups of the over 75 as you may recall, we pre-specified to this trial to have around 25% of our subjects over 75 years of age because that population does have more severe problems with the RSV. So I think if you look at the timing in the graphs, the upswing of the RSV season, it looks very much like we began our surveillance right at the perfect time. Now, so just keep in mind when you look at surveillance that was done in pediatrics. This is historically been based on antigen test, used in the ER or a doctor's office at certain sites throughout the U.S. And this is definitely mix some PCR that is pediatric surveillance is generally fastest two weak lag between the - as you might expect with the RSV is generally spreading from children to treating older adults answer so our view is that we actually got in at the perfect time in terms of the timing of the annual seasonal epidemic of RSV. So we are feeling very good about the timing of the onset of surveillance and the seasonality, again we have five-year pattern of surveillance it looks very similar to what we saw in past year and past five years frankly. So I think we are feeling very comfortable where we are at with surveillance onset and the incidence sort of caused to - then intensify the surveillance, networks in the U.S.

Okay, very good and then I guess also just one follow up question and the maternal immunization Phase 3trial, how is enrollment going in that trial and then also what affects the eventual number of patients between the 5000 to 8000 range.

Good question, so just to reiterate we are giving guidance to starting that trial in quarter one and just to remind you, we were able to start that in the quarter four and I would say again we're feeling very comfortable with how that starts. I don’t think we got to provide enrollment updates for that trial. Well Joel, I think the execution team is on it and we’re again thinking that that’s going as we hoped it would. I am sorry, what is the second question?

In terms of 5000 to 8000.

Okay, so the virtual trial is not - that or why does the issue have periodic reviews by DSMV that worldwide institute and they are going to locate safety and efficacy basically utility or vaccine efficacy. So I had a point when the bad team heckles me is considered positive, that's when the crock [ph] is shutdown. So your group sequential keep designing allows us to accommodate tap rates, variances in the tap rates as well as the vaccine. In fact and so the combination of those issues has a unfold allows take a look, so we are estimating if we gave guidance on where we treated 5000 and approximately 8000 subject to the recruiting not being obviously the driver for our board member will be a high vaccine number and, but still we will be positive of course there is 8000 recruited, so those are the factors that drive those total numbers and time to completion of bright trials.

Great, thank you.

Thank you. [Operator Instructions] our next question is from Heather Behanna, Wedbush. Your line is open.

Hi, I just had a couple questions, one with the Phase 3 enrollment then if you could just sort of comment on the population how it compares to Phase 2as far as far as age and any other factors we should think about when we’re to give out the potential firm order to just to be our single [indiscernible]?

Yes, hi Heather, great again, thanks for the question. So, as I mentioned, more less we reflect the population we saw in ETO1 trial which are 60 plus, stable heart and lung disease, ambulatory, in this population in the ETO1 we had about 70% of the subjects were over 75 years of age. We wanted to bump that up to get closure to the senses number for over 75 years of about 30%. So we recruited approximately 25% of subjects over 75. Now we look in the data we have in terms of immune response, we didn’t really see exactly within that population so we felt quite comfortable going forward with that. There is a higher rate of more severe outcomes and over the over 75 age group based on actually neurology studies and we thought got that was an important population to try to address move or more robust stated in a sub analysis when we're done with the trial. So, that was the rationale for recruiting a little happier in the over 75 ambulatory patient population.

Great, thanks for the color and then just once follow up on the question would be, ACIP recommendation that would come after approval, if you could just comment on any sort of educational work or things going on with the CDC before approval that you can do to sort of position the vaccine and the potential for a recommendation?

You are right. There are activities that go on in terms of providing some education and background, keeping the CDC apprised of the activities. I don’t think we’re really talking about what we're actually precisely doing, but we know that there are some immediate steps that have to go on in terms of letting them know we're working on this problem providing them information on some views of the disease and incidence of the RSV vaccine. So we are fully engaged in that because we have in our sights our plan to present our program to ACIP as we did an obviously a clinical group. As a first step to recommend [indiscernible] and so I don’t think we can comment with anymore detail on our activities.

No, this is Stan. I think we’ve announced and we are doing, we have announced this over a year ago, year and a half ago we hired a senior vice president commercial operations. Since then we’ve in fact we pointed out in this press release or this script that we have hired a couple senior market people to do exactly that, to gather the KLLs [ph] of the world and start education. We have a long process with the ACIP prior to BLA approval where we work based on our working group and we educate them and so, it is a long process.

The first step though is to inform the RSV working group at the CDC and we know there is activity in that arena.

Great, thanks for the color.

Thank you. At this time I show no other questions in queue. I will turn it back to Stan for any closing comments.

Thanks everybody and we had a great quarter. We are looking to report more throughout the year. Thanks.