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

Eric Schmidt – Tallinn Company Ren Benjamin – Rodman Vernon Bernardino – Dawson James Nicholas Bishop – Tallinn Company Steven Willy – Stifel Nicolaus

Good day and welcome, ladies and gentlemen, to the Vical Incorporated Financial Results Conference Call. (Operator Instructions). I will now turn the conference over to Mr. Alan Engbring, Executive Director of Investor Relations. Please go ahead, sir.

Hello everyone. Welcome to our Q1 2011 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, Ms. Jill Broadfoot. I will begin with a brief notice regarding protections and forecasts. 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 Q1 2011 financial results. These forward-looking statements reflect the company’s judgments 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 the participants. I’ll cover highlights today from our ongoing development programs and outline our anticipated progress for the remainder of the year, but before that I’ll ask Jill Broadfoot, our CFO, to review our Q1 financial results. Jill?

Thank you, Vijay. For the Q1 of 2011 total revenues were $600,000 compared with $1.5 million for Q1 2010, which reflected the completion of the AnGes funded portion of our Phase III Allovectin trial. We reduced R&D expenses in Q1 2011 compared with Q1 2010 primarily as a result of lower clinical trial cost for our Phase III Allovectin trial and our Phase II Trans Vax trial. Total operating expenses were $9.4 million in Q1 2011 compared with $10.1 million in Q1 of 2010. We ended the Q1 with cash and investments of approximately $52 million which was consistent with our prior guidance and which we believe is sufficient to support our ongoing development programs at least through 2012. With that, I will now turn the call back to Vijay.

Thank you, Jill. I’ll start today with some exciting regulatory developments for Trans Vax, our follow-up CMV vaccine for transplant patients, we announced in this morning’s earnings release that we recently had a successful face to face meeting with the FDA. The Agency understands that a (inaudible) is not practical and was open to considering a clinical release relevant to CMV’s viremia endpoint or a combined endpoint that also includes use of antiviral therapy. Just to jog your memory, we previously announced that we had a successful meeting with the EMA and received positive scientific advice on a number of important features of our proposed trial design. Importantly, the EMA confirmed our position that CMV disease is not practical as a primary Phase III endpoint. We are currently working with a group of CMV and transplant experts and are excited about progress towards defining the endpoints of our pivotal Phase III trial. We expect to finalize the design in the next quarter which will allow us to begin the trial later this year. Next I’ll provide an update for a novel Allovectin therapy for metastatic melanoma. Since our last call the melanoma community welcomed the approval of a new immunotherapy from Bristol-Meyers Squibb which we believe bodes well for Allovectin, and further phased the path for approval for additional immunotherapies. This new BMS drug is not a cure and there’s plenty of opportunity for additional treatment in the melanoma space. It was approved on a median survival of 10.1 months, which is not much different from (inaudible). It’s delivered by infusion in a hospital setting. Patients must be monitored closely and they frequently require aggressive treatment to control side effects. In the Phase III study, they generated great three-quarter reversals and immune response in 10% to 15% of the patients and had a drug-related death rate of more than 2%. Let me remind you as well of our Phase II trial of Allovectin. We had a median overall survival of 18.8 months with zero events of grave and three-quarters reversals as well. Our treatment is delivered in an outpatient setting with no pretreatment and minimal post-administration monitoring. Many patients go home or even back to work after they receive the injections. In our Phase II trial half of our patients were more than 60 years old, many of whom cannot tolerate existing therapies. We believe Allovectin could be an excellent treatment option for metastatic melanoma patients. Another key point is that Allovectin’s mechanism of action is unique among both existing and emerging therapies. Allovectin works by directing T-cells to find and attack the melanoma tumors. Some of the new approaches increase the overall number of active T-cells or increase broad immune system activity, or target specific melanoma subtypes. All of these approaches should be compatible with Allovectin and some may even be synergistic. We believe there’s plenty of opportunity for Allovectin in the treatment of metastatic melanoma. As a part of our planning for commercialization of Allovectin, we recently commissioned a detailed melanoma market analysis during Q1 from a leading consulting firm. They interviewed key opinion leaders, physicians, oncology practice managers and payers to evaluate the potential market for Allovectin in the United States of course. Their reports are of course proprietary but I’ll share some of the key top line observations. Big sales for Allovectin for metastatic melanoma were projected at between $0.5 billion and $1 billion, confirming our earlier guidance on the sales estimate was on the conservative side. Remember, Allovectin has substantial additional potential beyond melanoma through label expansion into head and neck cancer and other types of solid tumors. Now let’s go to the status of our prime lineup of programs. I’ll remind you that we completed enrollment in our Phase III trial in February of 2010 with a total of 390 subjects. The minimum efficacy follow up for staple disease patients in our trial is one year, which we passed in February of 2011 for the last patients enrolled. The maximum follow-up is two years which would take us to February 2012, so the date of first launch should occur sometime between February 2011 and February 2012. In this morning’s earnings release we confirmed our guidance for potential data of first market in the second half of 2011. Let me add a little color to that guidance. We are focused on two endpoints of the study. The primary endpoint is response rate at 24 weeks or more after animization [ph]; the second endpoint is overall survival. For both we’re looking for Allovectin 7 to demonstrate superiority over chemotherapy control which is the (inaudible) in this case. The data will remain blinded until we lock the database, and we need to lock the database for both endpoints at the same time. With the response rate endpoint, as long as patients continue to receive treatment they have the potential to respond. We don’t want to lose any potential responders by stopping the trial too early, so we need to make sure we have as few patients as possible on treatment when we decide to lock that component of the database. At this time we are tracking close to expectations regarding the number of patients remaining on study. For the survival endpoint we need to reach a certain number of death events to be in a statistical comfort zone. At this time we are running behind expectations on death event rates. Remember, we enrolled half of the patients in the last ten months of enrollment so projections are well backend loaded. This means that the metric could catch up with expectations over the next few months, however, there’s always a possibility that if we do not catch up we may not be able to lock the database by the end of 2011. Remember, the randomization is two to one so twice the number of patients are getting Allovectin 7. We’ll be tracking both of these parameters closely through the summer. We plan to provide an update on the timing of the database lock on the next conference call in early August. We are very excited by our progress and both these programs and plan to continue focusing on details as we approach completion of this pivotal program. Next I’ll provide a brief update on our vaccine for H1N1 influenza which completed a Phase I study during Q1. The trial was funded with support of the US government and was conducted in collaboration with the Naval Medical Research Center. Vical was the first company, to remind you, to develop, manufacture and initiate animal testing of a vaccine against H1N1 or the swine pandemic influenza during the 2009 outbreak. We demonstrated the potential of our technology very quickly through these efforts but waited and waited for US government funding to support the Phase I trial. The primary purpose of the Phase I trial was to provide further validation of human use of our technology platform for DNA vaccine technology and our Trans Vax. Our results are encouraging. More than half the vaccine subjects in a small trial of this size generated neutralizing antibodies against H1N1 viral levels with no safety issues. The secondary purpose of this study was to advance our platform technology towards more serious consideration by the US government for potential application in future infectious disease outbreaks. We announced during Q1 that we had extended our relationship with NMRC to further develop our platform. While the facts remain to be seen we have seen multiple threats from emerging infectious diseases as well as ongoing threats from established infectious diseases for which there is no effective vaccine. We are pleased to work with the US government towards building a first response vaccine capability to protect military personnel. In conclusion, we expect to continue our progress in our independent development programs through the remainder of 2011. As to our Phase I trial of Allovectin-7, we continue to drive towards locking the database in the second half of 2011 and provide an update on our next quarterly conference call. In our Trans Vax CMV Vaccine program we expect to finalize the design of our Phase III trial in the next quarter and initiate the trial in the second half of 2011. Our Japanese partners AnGes expects to initiate a multinational Phase III clinical trial of its Collategene angiogenesis product. We ended the quarter on track with our financial projections with sufficient cash to continue development of our ongoing programs at least until 2012. This concludes our prepared comments. Operator, we are now ready to open the call to questions from my invited participants. Thank you.

Thank you, Mr. Samant. The question-and-answer session will begin at this time. (Operator Instructions.) Our first question comes from Eric Schmidt at Tallin Company. Eric Schmidt – Tallinn Company: Hey, good morning and thanks for taking my questions. Vijay, I was hoping you could help us understand a bit more the term “clinically relevant” with regard to the endpoints on CMV vaccination, and also if you have some early thoughts on how you might combine clinically relevant duration with reduced medications – some sort of a composite endpoint? And lastly whether you plan on an SPA for that Phase III?

Oh, you ask some very good questions. I think we have an expert meeting coming up in the next one month at a workshop in Europe where we’ll actually finally nail down the definition of clinical significant duration, because there you have to (inaudible) where the sequence starts, and we want to make sure we use the most common denominator that hospitals across the world use in their treatment paradigm. And so we will develop a position paper and we will enforce it as we embark on these clinical trials. So the number can be 1000 copies or 1500 copies, we don’t know what the number is but that number is what clinically significant duration means – the definition at which we start the treatment. Your second question was whether, is there an opportunity to combine some elements of duration of antiviral therapy or initiation of antiviral therapy with clinical veremia endpoint? I think the answer to that question is yes, and again we are looking at experts to make sure as we put this to mind endpoint, how robust it will be for writing a label for this product, how robust it will be in terms of designing the clinical trials, keeping in mind that we want to keep the clinical trials small so it’s in offered drug status, and I think using some element of using antiviral therapy as a part of the endpoint is indeed doable and we are not at this stage ready to discuss that which is with an active discussion with the Agency. And the third question was whether we need an SPA. You know, it all depends on where we are in terms of our agreement with the Agency. I don’t want to speak on behalf of the Agency. I think the FDA has been very collaborative with us in this particular interaction, and if this collaboration continues… Vaccines generally don’t require an SPA but if we have some level of ambiguity, then it makes sense to get an SPA. But the downside of getting an SPA, it takes longer to negotiate an SPA so it impacts that start of the trial. So those are the things that we need to weigh as we get into this quarter. Eric Schmidt – Tallinn Company: Great, thanks a lot.

Our next question will come from Ren Benjamin at Rodman. Ren Benjamin – Rodman: Thanks for taking the questions. Vijay, can you just remind us what the number of events are that you need for overall survival? Have you told us that before?

We have not publicly disclosed that but you know, because something, otherwise we’ll have to start detailing on every call when we have those events. But it’s a 390-patient study so the event rate is going to be somewhere between 250 and 350. The longer you wait for the event to occur, the longer the death certificate, the longer trial is to remain open. We are working with statistical experts to come with an- We are targeting an event rate so that we are in a good statistical comfort zone given the parameters that we know from our Phase II trial without closing the database too soon. So I am not in a position to disclose the number, but trust me, we will pick a number that will give us a lot of confidence from our patients to get them to meet that endpoint. Ren Benjamin – Rodman: Okay. And is there a potential for a sixth independent safety review or are we all done with safety reviews?

No, we’ll have one more I think and Alan, correct me if I’m wrong.

Yeah, those run every six months or so as long as the trial is open. So we’ll keep doing those every six months.

It should be like the way the first five have gone because we don’t expect anything unusual. Ren Benjamin – Rodman: Okay, and then after the database is locked about how long might it take to report top line data? So will it be relatively quickly? Is the analysis pretty simple or is there something a lot more complex?

Well, it’ll take a few months because one of the things we have to do once the database is locked is we have to adjudicate the response rate by an independent set of adjudicators because we don’t want to announce the response rate endpoint and then the adjudicators find that the number is different. Plus it bothers the adjudicators if you pre-announce the numbers so I think the adjudication has to occur because the response rate number has to be based on the adjudicated number. We are right now working on the endpoint adjudication process with an outside group but it’ll add a couple of months as to when we can lock the database. It’s not going to be today. Ren Benjamin – Rodman: Okay, and just switching gears to CMV, anything you can tell us regarding partnership talks for (inaudible)?

I will tell you, which I have told you guys in our individual conversations, that our partnering discussions continue. There’s a lot of interest for this particular compound but at this point I don’t have anything to share with you. Ren Benjamin – Rodman: Okay, and then just remind me if we’re on track for Trans Vax and ACT patients, a Phase III trial in the second half of this year and maybe the potential for Trans Vax in solid organ transplants?

Yeah. So obviously the logistics of the game plan would be to do the Trans Vax ACT trial design agreed by both the agencies, start the trial and once the design study ACT trial. We can start the ACT trial because it will be a Phase II B study, well we can start the study to be locked up upon this particular endpoint so that’s really on the critical path. And though it’s in the second half it’s really toward the end of the year when we’ll start the study, even back where we are right now. Ren Benjamin – Rodman: Perfect. Thanks for answering questions and congratulations on the progress.

Thanks.

(Operator instructions). We’ll take the next question from Vernon Bernardino with Dawson James. Vernon Bernardino – Dawson James: Hi, Vijay, Hi Alan, hi everyone. Thanks for taking my question. I just wanted to dig down a little bit on Trans Vax some more. You had provided guidance of starting the Phase III at the end of the year, and you mentioned a meeting I believe next month or later this month with specialists in Europe. Can you tell us again what that meeting is? And with the guidance for the second half of this year, I’m just wondering how much of the Phase III design and logistics still need to be determined considering the meeting that you have coming up? And then I have a follow-up question if I may.

Sure. First of all, you know, I just want to make sure – this is not the mother of all meetings. We have interactions going on with experts all the time. There is a CMV conference coming up sometime Europe and we are going to meet the experts again, because we feel it’s important to meet a lot of the experts at that point in time. I think we have done a lot of homework of the endpoints. We need to make sure whatever endpoint and trial design we come up with needs to be harmonized between US and Europe so we can begin without having to run two different trials, so that’s really the goal right now is making sure we have a clinical trial design that’s workable with both regulatory environments. Vernon Bernardino – Dawson James: Thanks, and a follow-up question if I may. Regarding AnGes, just wondering if you could provide or at least flesh out a few more details regarding AnGes discussions with the Japanese regulatory authorities or just provide color on those discussions. Thanks.

Right, well as you know their Phase III study which was a small study in 40 patients, the data was really outstanding. Unfortunately the Japanese agency thought that they didn’t have a sufficient safety database and asked them to do a larger study. That study design by the way has been now finalized. They also have a special protocol of SPA from the FDA and the same study design will cover the Japanese component. I think right now they’re in the financing world, making sure they have sufficient capital in hand to both start the study and bring it to completion, and my counterpart in Japan, Yamada, feels that’s doable. Vernon Bernardino – Dawson James: Great. Thanks for taking my question.

We’ll take our next question from Nicholas Bishop, also at Tallinn Company. Nicholas Bishop – Tallinn Company: Hi, actually most of my questions have been answered. I just wonder if you could provide any more detail if you could about what the next steps are on Trans Vax with respect to reaching an agreement with the FDA. How much more discussion is expected and do you know about how long that’ll take, and what do you see the next steps there as being?

I think as I said our goal is to get this done in the next quarter, so our goal right now is based on the ongoing discussions with the Agency and there is more than one discussion, and with our experts to propose the endpoint and the trial design and get the agreement of the trial design. We not only discuss an endpoint – you discuss the trial design and endpoint in a single continuum. That’s exactly what we’re going to do now, we are at that stage. We have gone through the stage of having early discussions of the endpoint, now we need to put the trial design because they go hand in hand. They can decide at the start of the trial what needs to be that point. So we are at that stage and we are right now sharpening our pencils to come up with that number and our goal is again to keep that trial design small so it’s manageable. Nicholas Bishop – Tallinn Company: Okay, thanks very much.

(Operator instructions). We’ll take our next question from Steven Willy at Stifel Nicolaus. Steven Willy – Stifel Nicolaus: Hi, good afternoon, thanks for taking the questions. With respect to Trans Vax just a couple of questions. Would you be looking to leverage the agreed upon endpoint in the ACT trial into the solid organ setting just given that CMV disease is maybe a little bit more relevant in the solid organ transplant setting?

I think we have not, so as I’ve said before our energy right now is on really the Trans Vax endpoint, but the SOT has a variety of opportunities and I will send you a paper after this meeting where there’s a clear opportunity using the CMV anemia as the endpoint, okay, where despite all the antiviral treatment there’s still a huge gap that the antiviral load limit reduction can be shown in that patient population. So I don’t think we want to go towards the CMV disease direction at all because A) characterizing CMV disease is not easy, the trial designs are complicated, it’s a much larger study to do. And all the clinical experts that we speak with use really CMV veremia as really the threshold to treat – I better be careful how I say this… It’s really a biomarker for CMV disease. If you get enough CMV activation and enough number of reactivations, if you don’t start (inaudible) you’re going to get CMV disease. That’s really how clinically the disease is being treated right now. So I think we’ll stay on the antiviral, the anemia as an endpoint in that patient population. Steven Willy – Stifel Nicolaus: Okay maybe without disclosing patient numbers for the Phase III ACT trial, maybe just give a little bit of color around internally what the expectations are–

Our goal is around 300 patients, 300 or less. Steven Willy – Stifel Nicolaus: Okay, and then with respect to the pace of patient enrolment into the trial and just the competitive landscape I guess and the number of HCTs that are ongoing right now?

Yeah, I think we’ve let out a new study in this patient population now. We know which centers to go to, we know how to recruit, and I think we know which hospital centers are really getting the right number of patients where the trial recruitment can be done pretty rapidly, particularly if we do, if we expand the number of centers… I forget the exact number of centers we have, if we have 16 or 18 centers. We could probably double or triple those centers in the United States with a similar number in Europe, so we could get to this trial pretty rapidly. On the front of competition, I don’t know of any competition at this stage in this patient population, because remember, the uniqueness of our technology – this particular pathogen reactivation can be stopped really by a live attained virus, which the live attained virus are contrary to get into this patient population because of the breakthrough. The core pieces of our technology is that we mimic a live injected vaccine by putting two genes into plasmids – one is the allo protein and one is the (inaudible) protein; one uses antibodies, one uses T-cells. I don’t think anybody with conventional technologies is using a GP protein can do as a vaccine in this patient population. Steven Willy – Stifel Nicolaus: Thanks, Vijay.

(Operator instructions).

Well if there are no questions ladies and gentlemen, thank you very much.

And that does conclude today’s conference. We thank everyone for their participation.