Alan Engbring - Executive Director, IR Vijay Samant - President and CEO Jill Broadfoot - SVP and CFO

Stephen Dunn - Dawson James Eric Schmidt - Cowen & Company Ren Benjamin - Rodman Alan Carr - Needham & Company

Welcome ladies and gentlemen to the Vical Incorporated financial results conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers from invited participants after the presentation. I would now like to turn the conference over to Mr. Alan Engbring, Executive Director of Investor Relations. Please go ahead, Sir.

Thank you. Hello everyone, welcome to our first quarter 2009 financial results conference call. Participating on the call today are Vical’s President and Chief Executive Officer, Mr. Vijay Samant, and Vical’s Chief Financial Officer whose name recently changed from Ms Jill Church to Ms Jill Broadfoot. I will begin with a brief notice concerning projections and forecast. This call includes forward-looking statements including financial expectations and projections of progress in our research and 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 first quarter 2009 financial results. These forward-looking statements represent the company’s judgment as of today. The company disclaims, however, 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, Alan, and welcome to all our participants. I'll provide an update an progress on our key programs and some comments on the Swine Flu collaboration with the US Navy that we announced yesterday. We'll then open up the call to questions. Before that I'll ask Jill Broadfoot our CFO to read our first quarter 2009 financial results. Jill?

Thank you Vijay. Our financial results during the first quarter of 2009 reflected our ongoing progress in two of our key development programs. Our Phase III trial of Allovectin 7 in patients with metastatic melanoma continued to progress toward our expected completion of enrollment at year end and our fully enrolled Phase II trial of . TransVax CMV vaccine in patients undergoing bone marrow transplants advanced towards expected release of clinical efficacy data during this current quarter. Our first quarter revenues of $2.3 million were driven primarily by funding from our Japanese partner, AnGes, for our Phase III Allovectin 7 trial activities. Our strategic restructuring, which we began in the fourth quarter resulted in our focus on key development activities and led to a reduction of $1.5 million in operating expenses, compared to the first quarter last year, from $12 million down to $10.5 million. Our net loss was also reduced by $1.3 million for the same periods, going down from $9.5 million down to $8.2 million, consistent with our guidance. We ended the first quarter with $34 million in cash and marketable securities. Our first quarter 2009 net cash burn was consistent with our prior projections for our full year 2009 net cash burn of between $19 million and $23 million and sufficient cash through 2010. I will now turn the call back to Vijay.

Thank you, Jill. Next, I'll provide a quick update on our key development programs. Beginning with our Phase II TransVax therapeutic vaccine program for patients undergoing bone marrow or stem cell transplants. As a reminder these patients typically suffer from advanced cancers that defied eradication of their immune system.. A transplant can then start to rebuild their immune system. The use of immunosuppressive drugs to prevent transplant rejection allows latent CMV to reactivate complicating their recovery. Our TransVax therapeutic vaccine is intended to help control CMV during this period. In the fourth quarter last year we reported results from an interim analysis of immune responses for the first group of transplant recipients enrolled in our trial. These results indicated significant enhancement of CMV specific immunity as measured by T cell responses, to both CMV antigens targeted by the vaccine, pp 65 and gB, both with P values of less than 0.05. That trial is fully enrolled and we are currently analyzing serum samples from all transplant recipients through a four month follow-up. And to just suggest that immunogenicity result should translate into clinical benefit for these patients, we plan to report expanded safety and immunogenicity results and initial clinical efficacy results during the current quarter. Our analysis will use multiple efficacy markers relevant to these transplant patients, including frequency of viral reactivation, total anti-viral therapy, viral load and others. We recently introduced the TransVax name for our CMV therapeutic vaccine both to reflect its advanced status and to differentiate it from our prophylactic CMV vaccine which we are calling CyMVectin. TransVax is formulated with poloxamer to drive a predominant T-cell immune response and is intended as a therapeutic vaccine for transplant patients, hence the name TransVax. CyMVectin is formulated with Vaxfectin the same cationic lipid formulation used in our pandemic influenza vaccine to drive a predominant antibody immune response. It is intended as a prophylactic vaccine to prevent CMV primary infection in women, before or during pregnancy to protect their unborn child from transmitted CMV infection. Next I will move to our lead independent development program, our Phase III registration trial of Allovectin-7 in patients with advanced metastatic melanoma, which is being funded by AnGes our partner for commercialization in Asia. During the first quarter we announced the successful completion of the trial's second scheduled safety review by an independent safety monitoring board and the clearance to continue the trial per protocol. I want to emphasize that there are no planned interim efficacy analysis in this trial and that all data will remain blinded until after the trial is completed. The study is powered to detect differences endurable response rates, this end point was negotiated with the FDA through a special protocol assessment process. We are actively enrolling patients at 85 sites worldwide including our newest sites in Brazil. We expect to complete enrollment planned 375 patients in this pivotal Phase III trial by the end of 2009. We believe that Allovectin 7 is now a leading candidate for the first approval in over 15 years as a first line therapy for patients with metastatic melanoma. Next, I will provide brief update on some of our independent and partnered programs. In April of this year our Vaxfectin adjuvant was recognized as one of the 100 great investigational drugs in the annual ranking by R&D Directions Magazine. This was a significant achievement for a compound that recently completed its initial Phase I testing in our H5N1 pandemic influenza vaccine program. We are actively engaged with a variety of collaborators in testing Vaxfectin with a broad range of additional applications. This include our CRADA with the US navy for development of H1N1 Swine Flu vaccine, which was announced yesterday and our NIH funded program for the development of a DNA vaccine for herpes simplex type 2. HSV-2 is a highly prevalent sexually transmitted disease for which there is no current effective vaccine. We announced in April the publication of preclinical results, which identify potential targets for development of our HSV-2 vaccine. These targets are now being pursued under a two year, $2 million NIH grant. In our angiogenesis program we maintained active discussions with our Japanese partner AnGes and we are confident that regulatory review of Collategene product will lead to a approval in Japan later this year. The latest update from second angiogenesis partners Sanofi-Aventis indicates that FGF-1 angiogenesis product is advancing well towards completion of a multi national Phase-III trial for which a BLA filing is expected late 2010. I will devote the remainder of my prepared remarks today to the recent outbreaks of Swine Flu. A new strain of H1N1 influenza as emerged with components from swine, avian and human influenza strains. Because humans have not previously been exposed to this new strain we have little or no prior immunity. Existing seasonal influenza vaccine do not protect against the new Swine Flu, that’s the current seasonal H1N1 vaccine. The H5N1 avian influenza vaccine currently stockpiled by the US Government would not protect against the H1Ni Swine Flu and therefore a new vaccine is needed. Current capacity for production of seasonal influenza vaccine is not sufficient to manufacture both seasonal and a pandemic influenza vaccine. If seasonal flu vaccine production capacity is devoted for making Swine Flu, they will not be ready for at least six to nine months. Therefore, a faster method for vaccine development production is needed. Vical’s vaccine approach is well suited to emerging infectious diseases like H1N1 influenza or the Swine Flu. The potential of approach was demonstrated through successful completion of our Phase I human trials of Vaxfectin formulated DNA vaccines against H5N1 avian flu. It was also demonstrated through NIH’s successful completion of our Phase I human trial of DNA vaccine against SARS, which set a new speed record for advancement from concept to clinic. We are talking of production time of six to nine weeks rather than six to nine months with conventional vaccines. Some experts have compared the current outbreak to the 1918 Spanish influenza pandemic, which was also caused by a H5N1 strain previously unknown in humans. In its initial outbreak in the spring of 1918 it infected a relatively small number of people with relatively mild set of consequences before disappearing through the summer. When it returned in the fall of 1918, it rapidly spread worldwide and killed some 50 million people before eventually running its course. It would therefore be prudent to prepare for the worst. Our success with our Phase 1 H5N1 avian flu vaccine trial last year allows us to move directly into production and clinical testing of an H1N1 Swine Flu vaccine. We announced yesterday that we have entered into a CRADA with NMRC biomedical research group within the US Navy for expedited development of an H5N 1 vaccine. The Navy is an ideal partner for this program. First of all they have full understanding of the DNA vaccine technology through our prior collaborations on vaccines for malaria and dengue. They have the ability to conduct large clinical trials quickly, and they share our sense of urgency in advancing development of Swine Flu vaccine. To keep the program moving while we are pursuing the CRADA, Vical secured the genetic sequence for the new H1N1 Swine Flu strain last week. By the end of this week, we will have turned that sequence in to a prototype vaccine. By next week, we will have the master cell bank established, which will allow us to start manufacturing vaccines suitable for clinical trials. Before we advance to the more expensive stages of development, we expect that the government funding for this program will be in place. In summary, we are advancing towards completion of our Phase III trial of Allovectin-7 in patients with metastatic melanoma. We are approaching the release of beneficial clinical data from our Phase II trial of TransVax in CMV positive transplant patients, we have sufficient cash to continue development of these key programs, we are working under a new CRADA with the Navy to advance the Swine Flu vaccine and expect to secure commitment for government funding soon. We believe our platform technology continues to position us well for multiple successes. That concludes our prepared comments. Operator, we are now ready to open the call to questions from our invited participants. Thank you.

Thank you, Mr. Samant. The question-and-answer session will begin at this time. (Operator Instructions). And we'll take our first question from Stephen Dunn with Dawson James. Stephen Dunn - Dawson James: Hi, thanks for taking my questions and congratulations on a very strong Q1 for investors.

Thank you. Stephen Dunn - Dawson James: Yeah. I want to touch base first on CMV, and then we will go on to the H1N1, et, cetera. The CMV on the TransVax, we're going to have the Phase II data sometime this quarter. Could you give us a little more granularity on will that be like June 30th, or will that be June 1st, or can you give us a little color on when that will be?

I think it's an excellent question that you're asking. I think the data will be ready for before June 30th. We are right now looking at an appropriate forum to release the data. We generally don't like to release the top line data in a press release, because it then takes the impetus in presenting it at a conference. So, whether it's June 30th or a little bit earlier or a little bit later, the data is going to be ready. We just want to find the right forum. Unfortunately, I don’t have the forum yet lined up, but hopefully we will do that in the next few weeks and we will announce it. Stephen Dunn - Dawson James: And I guess, let's assume it's.

I can't hear you. You need to speak a little louder, sir. Stephen Dunn - Dawson James: Let's assume that it's satisfactory. Can you hear me now?

No. Stephen Dunn - Dawson James: All right, now can you hear me?

Yes, I can. Stephen Dunn - Dawson James: Okay, let's assume that's all satisfactory. And what are your plans to progress further into a Phase III? Are you going to wait for a partner, or you are going to do that yourself like you're doing with Allovectin or?

Again an excellent question, I think first of all we need to look at the outcome of the data. And assuming the data is good, the real next step is then to get together and design a Phase III study and negotiate the trial endpoints with the FDA. And that's going to take some time, my guess it will take at least six months, okay? And the trial, we can start after that. So the answer is in that interim period, we will be looking at opportunities in, both partnering as well as doing the program on our own, so it's hard to predict. And remember, this is the first set of data that's coming out of CMV. This is after four months follow-up. The real data is going to be also the second phase data, which is going come out after November, when we have for six months follow up to the final injection to make sure the second reactivation of MMVs is accounted for. So we need to take this data along with the next set of data that's going to come before we go to the FDA. So we are open to partnering but if the data looks outstanding and we raise more money obviously we'll do it on our own. Stephen Dunn - Dawson James: So if I could put words in your mouth, then you're going to go you ahead and design the Phase III study and I guess under an SPA on your own without waiting for a partner to provide input? So you're going to bring it at least to that point yourself?

The answer to that question is the thought process of how the Phase III study will be designed and what, the end points are or something that we don’t have to do it on our own because the partner expect us to do. The partner doesn't have the expertise. Stephen Dunn - Dawson James: Exactly. Okay. Let's talk a little bit about the prophylactic approach on CMV. I guess could you give us a little more color around your thoughts there?

I think it's the last big target for infectious disease, okay, because this could be a universal target for females of childbearing age. These are really adolescent females and if you see the success of Gardasil, this is really the last big target, all the big pharma companies are excited. We are a step ahead because we own a lot of the intellectual properties surrounding the gene sequences in application with the DNA vaccines. And we believe that the IND that we have filed, or are going to file, I think we have filed it. Am I correct? Yes, we have filed it, will allow us to get to a Phase I/II study to develop a proof of concept. We are obviously not going to proceed with the Phase I/II study till we have real partnering lined up to go ahead with this program because that study will only be a proof of concept study. The real efficacy study will be a large study, certainly we need a big partner to help us. Stephen Dunn - Dawson James: Okay. Great. I want to jump over to the let's just say the H1N1 a little bit.

Sure. Stephen Dunn - Dawson James: You were going a little bit fast for me. I know it was the genome was sequenced for H1N1 about two weeks ago. So, I'm trying to underscore the speed at which we can begin development with your technology. So the US Navy got the gene sequence last week. I guess if you walk me through, the actual work, give us the start time and what work has been done?

Well, first of all the genome was sequenced by a lot of people but the real official sequence comes out of CDC, okay. Because a lot of private people have sequenced it to week. We aligned, the sequence from CDC, the Navy did not get the sequence. We got the sequence from the CDC. We'll have the plasmid synthesized and ready, which is the vaccine concept by this Friday. So, the speed it amazing. It takes about four days, five days after you get the sequence to synthesize the vaccine, if that's what you're looking for. Stephen Dunn - Dawson James: Right. Did the Navy approach you or you approached the Navy or how did that relationship go?

The Navy approached us. Stephen Dunn - Dawson James: All right And I'm going to, I'm sure you're aware that there is some hints, based on some patients in Canada that perhaps the lethality that we've seen in Mexico City, may have actually been attributed to H3N2. If that is the case, do you think it's a possibility or a probability that the Navy would also want to do in parallel an H3N2 version with you?

Well, I mean, there's a lot of news, unconfirmed news reports. We don't know really what the facts are, okay. We don't know why the mortality in Mexico was so high, was it the standard of care in Mexico or were other compounding factors. I think, it's premature at this stage to say, whether it's H3. But in case there was another strain involved, obviously we will have to work on it with the Navy and if that really bears out, okay. Stephen Dunn - Dawson James: All right. Well, again, congratulations for a great Q1. Investors really did well. I'll jump back in the queue.

Thank you.

We'll take our next question from Eric Schmidt with Cowen & Company. Eric Schmidt - Cowen & Company: Good morning, Vijay. Just one more question on the CMV vaccine data that we are expecting I guess towards the June timeframe. Could you just remind us on the efficacy endpoints that you mentioned? Is the trial powered to show any improvement in viral load reductions or number of viral reactivations? And if not, what would you generally expect from the control arm in a study of this sort?

I think the trial is powered, if I'm not mistaken. I'll get back to you with the specifics on it. It is powered to measure viral reactivations, also the total amount of anti-viral therapies or endpoints that I mentioned. So, we are hoping that we are going to get some level of P values. Okay? Eric Schmidt - Cowen & Company: Okay, I'll follow-up with Alan offline, then, thanks.

Yeah.

And we will take our next question from Benjamin with Rodman. Ren Benjamin - Rodman: Hi, good afternoon and thanks for taking the questions. Can you give us a better sense as to this CRADA announcement with the US Navy, is there any funding involved in this at all, or is it more just collaboration, where you will have to be some of the initial funding and they will conduct some of the trials? Can you just give us some color as to how this works?

Excellent question, again. The CRADA is really the first step in terms of securing funding. By getting the CRADA in place, the Navy then lets the authorities, for which they're going to secure funding, let them know that they have a private company ready to partner to go with them, so that they have the resources, including the access to the technology to move forward, so the CRADA is really the vehicle that allows them to secure funding. Okay? Having said that, we are spending some amounts of money until the Navy secures funding to keep this process moving, as I mentioned, in terms of getting the construct made, to making sure the master cell bank is made. But we are not going to spend enormous amounts of money on our own till the full funding comes from the appropriate government sources. In terms of the roles of the two organizations, Navy primarily will conduct the clinical trial, because they have access to the patients. They have a clinical trial setup. We will be responsible for filing the IND and manufacturing and doing the clinical assay. Obviously we will be reimbursed for those activities. Ren Benjamin - Rodman: Right, so do you or will you also, on a side or separately apply for any government funding that may be available? And along with that, has there been an RFP or something going out from the government to companies?

No, I think you need to understand. The Navy, obviously has always an inside track in dealing with government resources, much better than company like us. So we are not going to go out and secure fundings for this activity outside our collaboration with the Navy. We are going to rely on the Navy to secure that funding for us. Ren Benjamin - Rodman: Okay, great. And then I guess along with this whether this becomes a pandemic later on or not, what is the path forward as far as stock piling may be concerned? We hear lots of different reports. The animal rule, you acquire at least human Phase II data, what is your understanding as to what needs to be complete in order for the government to come in and potentially stockpile this vaccine?

Again, an excellent question. It all depends, Ren, in terms of how severe the crisis is. If the crisis is really bad, the pandemic really gets bad the mortality is high, then the FDA under the emergency use authorization has the ability to approve anything on simple animal data. If it's serious enough but it's not as serious as I mentioned earlier, they can approve it on the basis of limited Phase I immunogenicity study. If it's not serious, its business as usual, and it's a new vaccine, it may take the full gamut of approval. So it's hard to predict what's going to be required but knowing what I'm seeing and the way that this H5, H1N1 is going around the world, don't be surprised that the pandemic is declared, okay. The declaration of pandemic is to do with some specific modalities on how the strain has spread in different zones of the world and how much sustain human to human transmission, it has nothing to do with the mortality of the patients exactly. So the declaration of pandemic doesn't mean that a lot of people are dying. So you can still get the declaration of pandemic, I would call it a class II seriousness and it could accelerate the development of such a vaccine. Ren Benjamin - Rodman: And can you just review for me or just reconfirm that the manufacturing facilities that you have in place are certified and that, anything coming out of that would be ready to not only enter the clinic but also go into stockpiling or any other uses?

Well, as well certified as any company of our size is. Remember, the amount of clinical trials that we have done here including making the Phase II material for the NIH, for the HIV trial. We had made material here that went into Ebola, SARS, West Nile, Anthrax, Allovectin-7 in the Phase III study. So it has been inspected by the California FDA, we have outside agencies, groups who have come in and inspected it. The answer is yes, the facility is in great shape. We pride ourselves in maintaining a good cGMP manufacturing facility here. Ren Benjamin - Rodman: And just regarding, you had mentioned how fast you can manufacture the vaccine. Can you give us a sense as to the capacity that can be generated right now?

The capacity in our own facility is going to be limited. Depending on the productivity, how productive is the strain is in the fermenter, say half a million doses in a few months time. Okay. But remember, we don't make the vaccine. All we make is the plasmid. The vaccine is made in the human muscle cell when we inject the plasmid. So when people say how much does it take to make your vaccine, we are not a vaccine manufacturer, we make a genetic fermentation plasmid. And given that simplicity, we have the ability to go and contract out to large fermentation contract manufacturers who can make this vaccine easily. So when you're talking of people who are competing cell culture manufacturing processes, they're making a vaccine externally. We make a plasmid, which is injected in the muscle cell, which makes the vaccine in the muscle cell. So we use the body to make the vaccine. That's where the capacity is. Ren Benjamin - Rodman: Right, just switching gears quickly to the CMV program, I guess, just to follow-up on a previous question, it's hard to detect a statistically significant result. Can you just give us a sense as to what would be a clinically meaningful result for you outside of the, let's say statistical, what sort of numbers are you looking for, either in reduction of reactivation or viral load decrease? Can you give us…

And the first one is that the vaccine has to be immunogenic in the placebo group and the vaccine group. So the first starting point is the immunogenicity data that, if you can show that the vaccine is immunogenic in these immune compromised patients between the placebo group and the vaccine group, you have crossed the first hurdle. Ren Benjamin - Rodman: Right. So that we've already seen, right, correct me if I'm wrong, from the interim results.

The interim results it was immunogenic, where it has to bear out now for all the 80 vaccines that we have in the recipient group. Ren Benjamin - Rodman: Okay.

Once you crossed that hurdle, then you need to titrate. That immunogenicity with correlation with reduction in viral load, the total number of reactivations, the amount of anti-virals that have been used, so that's the process, okay? Ren Benjamin - Rodman: Okay. And then just regarding the timing of the prophylactic trial, and I may have missed this when you were going through it. But clearly this is a huge market opportunity, and so did you mention that you would conduct a proof-of-concept trial and then try to secure a partner before conducting the pivotal trial, or would you try to secure a partner after these data from the bone marrow transplant come out in order to do that entire prophylactic program?

I think first of all, these are independent programs, so they actually proceed in parallel. They're not connected with each other, because one is based on a base on a poloxamer base and it vary different set of patients. One is based on Vaxfectin in much healthy volunteers. Having said that, given our financial resources right now and the fact that we have to prepare for, assuming the Allovectin-7 data we prepared for BLA, we are not going spend money on the CMV general Phase I/II study. We hope that we either get money from governmental sources or a partnering effort to do that study. And until we get that money, we are not going to start. But in order to facilitate partnering, we have laid out the study design. We have filed an IND, so we will be prepared if somebody is willing to go with us. Ren Benjamin - Rodman: Got it, and I guess just one final question regarding milestones for the remainder of 2009. You mentioned some of it in the press release, but could you just go over all the milestones you expect to hit in 2009? We have some things like you mentioned in the call the AnGes is expecting to receive Japanese marketing approval. But is the Phase III, the potential Phase III in the US still on track for 2009, is there still Phase III trial results being expected from the Sanofi collaboration? Can you just go through what we might expect for the rest of 2009?

Sure, so the important highlights. First of all, Number one is completion of our Allovectin-7 trial, 375 patients, okay? That's a big milestone. We have been working on it for almost a dozen years now and nothing is going to approve for melanoma. We are very excited how the trial is going. So we are hoping to announce the conclusion or completion of the 375 subjects in the AIM trial as we call it. As I told you, we should have data on the CMV TransVax study, after four month follow-up, again by the end of this quarter. We expect approval of Collategene approval, which is the angiogenesis program by AnGes. Hopefully by the end of the year, our discussion, as I said in my conference call is their discussions with the agency are going well, and they seem to be very confident that it will get approved. So I'm going to count on their advice. Sanofi-Aventis in their Analyst Day had given an update and we understand that they will file their BLA in the year 2010. So we are expecting data either late '09 or early '010. We don't have granularity on exactly, when the data is going to be available. We expect full approval of Merial's of melanoma vaccine for dogs. Everything is on track. The data is being submitted, so it's going to happen in just a matter of time. We expect AnGes, to at least make an announcement in terms of timing of the start of the trial. I'm not at liberty to state, what the timing of that is, but I think their interactions with the FDA have gone well and they continue to go well. This would be the Phase III study for angiogenesis in the United States. Ren Benjamin - Rodman: Okay, is there anything regarding the pandemic flu vaccine that's ongoing, now?

Pandemic mean, H1N1 or H5N1? Ren Benjamin - Rodman: Yeah. Sorry, I guess H5N1.

We've already done all work on it. We've released all the data on it. And we're still in active discussions on funding with a variety of groups. Unfortunately with the Swine Flu outbreak everybody’s attention is been distracted to the H1N1 but if you go to the World Health Organization site, even this morning, there are still outbreaks of H5N1 in Southeast Asia. So that's going on. The fact that you have H1N1 Swine Flu, the threat of avian influence has not gone away. If anything the cumulative cases of H5N1 over the last several months are significantly higher than the H1N1. Ren Benjamin - Rodman: Well, great. Thank you very much for answering the questions and good luck.

(Operator Instructions). And we'll take our next question from Alan Carr with Needham & Company. Alan Carr - Needham & Company: Hi, good afternoon, everyone.

Hi, Alan. Alan Carr - Needham & Company: Wondering if you could give us a little more detail about what's involved in this CRADA in terms of what work you're going to be doing. I understand that you're going to be making the vaccine. How much clinical development does this agreement with the Navy entail?

So a little bit on this H1N1 flu that did not capture in the call. We have a head start because we got the gene sequence -- as I told you, we'll make the H1N1 plasmid by this Friday which is a couple of days from now. As compared to the conventional flu guys actually need to see seed stock of the H1N1 from CDC. We understand that that's going to take at least another three to four weeks before they get it. Simply because as you were able to understand, what they do is they take the Swine Flu, the wild type that's available right now, which is in their possession and they put it on through a re-assortment process on a backbone . So it's attenuated, so its not -- doesn't require handling in a BSL-3 facility. Otherwise if you give the wild type the manufacturers need a BSL-3 facility to make the vaccine. And that I understand is not going that smoothly and it's going to take them some time before they get it. So we've already got a month's head start. Then we make a master cell bank, which we intend to complete next week and the master cell bank is the one that allows us to make -- start bringing, start running - making a fermentation run. In parallel we’ll run small animal studies before we make large fermentations to make sure that vaccine plasmid [cast] that we made is immunogenic in mice just like the H5N1 was. We have sufficient baseline data and we can demonstrate that vaccine is immunogenic in mice while we are ready to go into a full scale fermentation run that will go into the clinic okay. You can in parallel have a quick IND meeting with the FDA. It can be expedited. Because remember the IND is going to be required for H1N1 is identical to the IND that we filed for H5N1. It's a comparable product. We don't need any preclinical talks work because we have done a all that work with H5N1 and remember. Plasmid is a much bio-- they're comparable as a - -- if you have the insert of the same variety, okay. So in terms of our work would be is to get the master cell bank, make sure that the vaccine indeed is immunogenic in mice and then wait for further funding which we expect the Navy will be able to secure. Alan Carr - Needham & Company: When could -- assuming that preclinical work in mice goes fine, when would you be able to start a Phase I study with this? Is that three months out or two?.

If everything goes well and we get good cooperation from the FDA, you can start as early as July. Alan Carr - Needham & Company: July.

That's fast? Alan Carr - Needham & Company: Yes. And what scale clinical studies would you be doing here under this?

Again, we need to have a discussion with the FDA. So you can take two approaches, right? You may ask the FDA a question, hey, we want to do a study in 150 patients to demonstrate that the vaccine is immunogenic, or an alternative question would be, hey, we want emergency use authorization assuming this crisis continues. And if you want emergency authorization, what kind of study will be required. In that case the study, my guess would be higher than the 100, 150 study that we did previously could be as high as 400, 600. I don't know the answer to that question. So, can't really answer until we have that discussion with the FDA. Alan Carr - Needham & Company: For emergency use authorization in all cases, would you just need to show immunogenicity, or just safety?

Well again, I don't know whose question I answered, was that Eric Schmidt or whose question. The emergency use authorization requirements all depend on how serious the crisis is at hand. Alan Carr - Needham & Company: I see.

You can get approval on the basis of animal data. Remember, every year the flu manufacturers don't do any human study. They basically get approval of the seasonal influenza vaccine based on animal data. Alan Carr - Needham & Company: Okay.

So in flu, there is sufficient precedence for that, okay? Alan Carr - Needham & Company: Okay. And a big picture question for you. Have you seen in your conversations with government and non-governmental organizations over the last few weeks, have you sensed any sort of shift in openness towards non-traditional vaccines?

I think the answer to that question is yes. I think there is a recognition that they have to really think out of the box to deal with these new sets of crisis that are coming on. As I mentioned earlier, the threat of avian influenza, H5 has not gone away. Naming it's looking out there, and the fact that there's an H1N1 [rumors] started circulating that doesn't mean an H5N1 can't come. So the answer is there is a recognition, because of the emergence of H1N1 and with the limits of capacity, and the issues of the conventional technology, we really need to think outside the box is what we are hearing.

And there are no further questions at this time. I would like to turn the call back over to Mr. Samant.

Well, ladies and gentlemen, thank you. This concludes our conference call for today. All parties may now disconnect.

Ladies and gentlemen, thank you very much for your participation.