Alan Engbring – Executive Director IR Vijay Samant – President and Chief Executive Officer Jill Broadfoot - CFO

Eric Schmidt – Cowen & Co. Reni Benjamin – Rodman & Renshaw Lee Olesky – Credit Suisse Steven Willey – Stifel Nicolaus Nathan Kelly – Noble Financial

Thank you and welcome ladies and gentlemen to the Vical Incorporated financial results conference call. (Operator Instructions) I would now like to turn the conference over to Mr. Alan Engbring, Executive Director of Investor Relations. Please go ahead, sir.

Hello everyone. Welcome to our first quarter 2012 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 note concerning projections and forecasts. This call includes forward-looking statements including financial expectations and projections of progress in our research and clinical development program, that is subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks as reported 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 2012 financial results. These forward-looking statements represent the company’s estimates 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 thank to all our participants for joining us in today’s call. I will provide a base on each of our key development programs and share some insight that I hope will be helpful. To begin with today, we’re going to deal with our latest financial results by our CFO Jill Broadfoot. Jill?

Thank you, Vijay. I’m pleased to announce we had a very strong first quarter financially in 2012. We raised approximately $50 million in a follow-on offering at the beginning of the quarter, and we earned another $10 million with a milestone payment from Astellas at the end of the quarter, for finalizing the general design of the TransVax Phase 3 trial. In addition, we recognized $1 million in contract service revenue related to our supply and services agreement with Astellas. We expect to continue receiving payments from Astellas under our supply and services agreement as we progress with the final preparations and conduct of the TransVax clinical trial. Total revenues for the first quarter of 2012 were $11.5 million, compared with $600,000 in the first quarter of 2011. Total operating expenses for the first quarter of 2012 were $11.6 million, compared with $9.4 million for the first quarter of 2011, primarily due to a sub-license payment obligation related to the $10 million milestone payment from Astellas. Our net income in the first quarter of 2012 was $200,000, which rounds to $.00 per share, compared with a net loss of $8.7 million, or $.12 per share, in the first quarter of 2011. We ended the first quarter of 2012 with cash and equivalents of $96 million. During the first quarter of 2012, we were pleased to be able to sell two of our three auction-rate securities, and book a gain of approximately $300,000. The cash for the Astellas milestone payment was received in April, after quarter end, so our current cash position is even stronger. We believe we have sufficient capital to support our ongoing operations, our planned development activities and our preparation for our Allovectin commercialization. With that, I will now turn the call back to Vijay.

Thank you, Jill. I will begin with an update on our Phase 3 Allovectin program for patients with metastatic melanoma. Allovectin is our lead program. We are excited by our progress to-date in approaching the trial completion. We believe we have designed an excellent trial to highlight the patient benefits of immunotherapy compared with chemotherapy. We believe we have selected the right set of patients to demonstrate the benefits of immunotherapy. We believe our trial execution and data collection are well-managed, and definitely designed a data adjudication process for the primary endpoint, and believe the trial is adequately powered to demonstrate statistical significance on both the primary and secondary endpoints, and finally we expect to release the top-line data from both the endpoints by the end of the year. As a reminder, we enrolled 390 subjects starting in Jan of 2007, ending in Feb 2010. Our trial allowed up to two years of treatment, so the last patients enrolled could have received treatment until Feb of 2012, as long as they had stable disease or partial responses. Those last patients enrolled completed their final treatments in Feb, and they completed their last post-treatment safety follow-up visits by the end of March, so the treatment stage of the trial is now complete. We are currently finishing the final data audits to verify that all the patient records are complete and correct. We expect to complete the data collection and the audit process for the primary efficacy endpoint response rate by the end of this month. That clears the path for completion of our independent endpoint assessment and adjudication process for our response rate endpoint. This process is two distinct steps, radiology and oncology, and they are conducted sequentially. They are pretty comprehensive steps. For the radiology step, the goal is to agree on each patient’s target lesion measurements based on the following process. Two radiologists independently review each (inaudible) and document each lesion measurement. If the measurements are not in agreement, a third radiologist reviews both the assessments and chooses the read from the one radiologist that in his judgment is the most accurate. This process is repeated for the patient at each scan point, so that’s a significant amount of work. Now remember, we have almost 390 patients, and that results in about several thousand scans, so this is a pretty labor-intensive process, and takes a long time. After the radiological evaluation is finalized, that data, along with physical measurements and totals of visible lesions, ultrasound imaging, patient medical histories and other supporting document information is provided to three oncologists, who together conduct the final evaluation. This assistance, as required by the radiologist who was the adjudicator, based on patient-by-patient analysis, they will carefully determine which subjects met the primary endpoint of clinical response rate at 24 weeks or more after randomization, which subjects had stable disease and which subjects progressed during the course of the trial. Throughout this process, they remain blinded as to whether each subject was the treatment arm or the control arm. This assessment and adjudication process is expected to take several months, and as you know there’s a lot of logistics involved in scheduling the radiologists and oncologists, these are very important experts in logistics and bring them together is not very easy. So, that’s why it’s a time-intensive process besides the intensity of the scans that they look at. The results will remain blinded in a third-party database until we reach the trigger for the second endpoint of survival. Analysis of the database for secondary endpoint survival is relatively simple. The key number for each patient is the time from randomization into the trial until death. For the survival endpoint we are tracking the overall number of testaments for the trial but we are blinded by the number of events for the study arm. The databases for two efficacy endpoints are separate and will be processed separately. The results will remain blinded until both are finished. We expect to announce the top-line results for both efficacy endpoints simultaneously by late 2012. What else is going on with Allovectin-7? A number of things are going on, both in the manufacturing front and the commercial front. We are advancing our preparations for a daily filing and potential commercial launch for Allovectin-7, as covered in our last quarterly call. Since then, we have reviewed chemistry, manufacturing and controls for Allovectin-7 in the pre-BLA (CMC) meeting with the FDA. The objective of this meeting was to conform the acceptability of our plans for transition to promotional production, and we are pleased with the outcome. So, all aspects of the Allovectin program are advancing well. We are excited with both the progress and the potential. As you all know, immunotherapy for melanoma is now part of the standard care of advanced melanoma treatment, as a result of two recently-approved drugs. You’ll also recall the positive preclusive data we announced last year, demonstrated synergy using a combination of Allovectin-7 and an anti-CTLA-4 antibody. We look forward to building on this recent progress. Again, just to remind everybody, we expect to announce the top-line results for both response rate and survival endpoints by late 2012. If the results are positive, we look forward to offering a safe and effective treatment option for melanoma patients. With that, now I’ll move on to our CMV program. TransVax, or therapeutic vaccine designed to control CMV infection or reactivation in transplant patients. Since licensing this program to Astellas last summer, we’ve been working together to develop a multi-national, pivotal, Phase 3 trial for transplant recipients of stem cell transplants. Our agreement with Astellas was recognized recently at the Vaccine Industry Excellence Awards as one of the best licensing deals of the past year, and the collaboration continues to work well. Late in the first quarter, we and Astellas were able to finalize the general design of this trial, which triggered the $10 million milestone payment to Vical that Jill discussed earlier. Based on guidance from the FDA and the EMA, we have confirmed that the CMV disease will not be the primary endpoint of the Phase 3 trial. We initially took the lead role in the collaboration for continuity in our interactions with the agency, FDA. Once we agreed on the trial design, we have now transferred the R&D to Astellas, who will be leading the agency interaction along for the rest of the program. We are now working with Astellas to complete the product protocol, and will then become a supplier to Astellas in support of the TransVax program. Under our services and supply agreement, Vical will manufacture TransVax for Astellas through clinical development and commercial launch. We expect Astellas to initiate a Phase 3 trial of TransVax for stem cell transplant recipients in the second half of 2012, and to initiate a Phase 2 efficacy trial of TransVax for solid organ transplant recipients shortly thereafter. With that, I’ll move to our Herpes Simplex program. This is a key development program in the Vical pipeline, our Vaxfectin-formulated vaccine against HSV-2 generated some very strong data for this target in mice and guinea pigs. We announced in our last quarterly call that we are advancing this Herpes vaccine into the clinic. We believe a relatively small Phase 1 / 2 study could be conducted in HSV-2-positive and symptomatic volunteers. This a large and a very motivated population, so we expect to be able to recruit the study very quickly, and also get results very rapidly. We are completing all the requirements to support an R&D application, and we expect to be ready to initiate a Phase 1 / 2 trial in 2013. In summary, we have secured financial resources to support our planned development, at least through the next year or more, allowing us to focus on continued progress of our independent and partners programs for the remainder of 2012. In our Phase 3 trial of Allovectin, we expect to release top-line data, both for primary and secondary efficacy endpoints, by late 2012. And our collaborative TransVax CMV vaccine program, we expect to initiate a Phase 3 trial in stem cell transplant recipients in the second half of 2012, and to initiate a Phase 2 trial in solid organ transplant recipients shortly thereafter. In our independent program for the development of vaccine for Herpes Simplex 2, we expect to advance through the remaining preclinical requirements to allow initial human testing in 2013. This concludes my prepared statement. Operator, we’re now ready to open the call to questions from my invited participants. Thank you.

(Operator instructions). Eric Schmidt with Cowen and Company, please go ahead. Eric Schmidt – Cowen & Co.: Thanks for taking my question. Vijay, on Allovectin, it sounds like you’re spending a considerable amount of time and money to adjudicate the primary end point response rate, which seemingly is less relevant to the regulatory agencies these days. I guess I’m wondering two things. One, if you’ve had any discussions with the FDA about simply changing the primary end point to overall survival? And two, does it actually make sense to spend the money to adjudicate a response rate? It seems like the BLA is going to focus more on survival.

We had to spend money on adjudication data because, remember, the BLA is still valid with the agency and [inaudible] the primary endpoint. If we don’t adjudicate it, we will be in violation of the FDA. So you know, the agency has told us to stick with the current statute of the of VSP and that’s why we are sticking with the statute BLA. Having said that, you are absolutely right, given the fact that the landscape has changed with the approval of two [inaudible] survival. Survival is going to be an equally important endpoint. So we are – they’re hitting on both fronts and we need to make sure that before the statutes of VSP but at the same time we’re going to have to demonstrate survival advantage of the study. Eric Schmidt – Cowen & Co.: Thank you.

We’ll take our next question from Reni Benjamin with Rodman. Reni Benjamin – Rodman & Renshaw: Hi, good afternoon, and thanks for taking the questions. Congratulations on the progress. Just getting back to Allovectin 7, Vijay, can you – am I assuming correctly that the date of days lock will actually occur only after all the adjudication processes are done by both the radiologist and oncologists or does that happen before?

The final database lock would occur after all the adjudication is complete. And then they will have the ability to go and analyze. But remember that whole adjudication process, just to remind everybody, is blinded to the oncologists. So they don’t have a real idea of what’s going on in terms of which arm is performing where. All they’re doing in that adjudication process, after the radiology component is done and the oncology component is done, is identifying patients as [inaudible] or stable disease and these patients are progressers. Once that database is locked, we don’t have the ability to run a fast program on it and actually found for both arms [inaudible]. Reni Benjamin – Rodman & Renshaw: Okay. But just so I’m understanding you correctly, all this data, the adjudicated data will be done, you know, will be put into a third-person database. You will not run that program until the survival results are in as well?

Absolutely. They are all third party. We have no access to that. We don’t participate in the adjudication process. We participate in the training needs to the adjudication process, but we do not participate in the adjudication process. Once the adjudication process starts, we are out of there and we have no knowledge of what’s going on until the database is locked and we take posession of it. And we don’t intend to take possession of it until we meet the other database completion requirements which is survivor data. Reni Benjamin – Rodman & Renshaw: Okay. And in the prepared remarks, you mentioned that the topline data, you know, should be out in the fourth quarter as well, which is what you said in the previous calls as well. Have you had any further thoughts or discussions regarding stopping the – you know, stopping the trial even before let’s say the events are out? And I guess the reason why I ask is you might have some sort of a decent idea as to how these patients are doing given the previous Phase II trial with Allovectin 7 and the fact that it’s the same patient population. Have you done any sort of analysis like this and gotten a sense as to where you might be?

Well, we obviously, you know, do a lot of analysis. This is our bread and butter, you know, we sleep and eat it and we’re working on it all the time. The answer is, yes, we have done, but I think we also have to be careful, this is one single trial we’re conducting. It’s a relatively small trial, 400 patients. We really need to hit a homerun on the survival front. Okay? So any attempt to try to uncode the trial sooner and missing the endpoint by a very short margin would be fool-hearted at this stage. So you know, and if I told you we’re not going to get unblinded data until we get the adjudication complete, and I don’t think we are nowhere to completing the adjudication, so we have time to make that decision, but I don’t see any reason why we would unblind the data sooner than what we have told you previously. Reni Benjamin – Rodman & Renshaw: And I guess just related to that, in the previous Phase II trial, and I think you mentioned you were doing multiple analyses, could you give us a sense as to how the – just remind us how the control patients did from a level point of view?

Your question is in the – in our current Phase II study? Remember, in the Phase II study, it didn’t have a control arm because it was an open-label study. But our assumption is currently in the control arm for this study’s 11-month estimate, which is useful calculations. And this was based on the start of publications. Okay? And remember, we are using some heavy patients and that 11-month [inaudible] patients. We looked at that number very carefully and done a further analysis of relevant [inaudible] publications and as you know, there are no trials that exactly mimic this patient population in the last 20 years. Our best estimates come from the detail analysis also of our own Phase III study. You know, we had conducted a low-dose Phase III Allovectin, so we have a lot of our own data where we’re able to look at speculated population in the current Phase III study and that data further supports Allovectin right now. We’re very comfortable. Of course, you know, you need to understand that with the recent approval of the two new [inaudible] segments, you know, it may [inaudible]. But you know, that, in fact, in the treatment in the control arms should be no less for Allovectin than the current [inaudible]. So we remain confident that our study adequately follows to the point. Reni Benjamin – Rodman & Renshaw: Okay. And just a question on the tends that you know, you’ve finalized the trial designs. Can you talk to us a little bit about what the final trial design will look like?

I think we are in the close of discussions with the agency right now and I don’t want to upset our partner in terms of revealing what the trial design is. [Inaudible] has put a lot of effort behind it. I think the trial design will be pretty comprehensive. I think it’s all progressing very well. Reni Benjamin – Rodman & Renshaw: Okay. And then just given the recognition you got with the TransVax deal, any thoughts regarding [inaudible]?

Well, the answer to that question is yes, you know, I think we are still waiting – remember, the FDA conducted a workshop early this year on it and that position paper from the agency [inaudible] endpoints have not come out yet. Once that position paper comes out, I think it will show what groups of contact study needs to be conducted. Right now there’s a [inaudible] of what’s required but that workshop was extremely helpful because all the four big pharma companies were there including the key opinion leaders and as soon as a position paper comes out, we should be in a much better shape. Reni Benjamin – Rodman & Renshaw: Do you have a concept of when that position paper may come out?

I think in the next few months. Reni Benjamin – Rodman & Renshaw: Okay, great. Thank you. Good luck.

We’ll take our next question from Lee Olesky from Credit Suisse Lee Olesky – Credit Suisse: Great. Thanks for taking my question. I guess we’re not keeping it to one. One question I have is on overall survival, since you gave us the update, what have you been seeing in the event rates since that gives you the confidence that we’re still looking at a late-2012 release? And then in terms of the physical power, just to be clear, if we move to the lower end of the published range on the Allovectin and the upper end of the comparator arm, you still think that there would be enough power for significance?

So the first question is, what gives you the confidence that we will reach the event rate that we – which we have already described to you what it is by year end. The answer is, you know, we look at – Jill, myself and my team look at the data on a rolling four-month average basis and we have an idea of what the slope of the event rate that’s occurring. And based from that, we feel fairly confident right now that we’ll reach the event rate by year end unless something happens remarkable in the next two months and nobody dies. But you know, that’s unlikely to happen. Right now we’re targeting toward – also, you need to understand that goal we have targeted for event rate, if we need to complete plateau, then we will reach basically a point of demonstrating the drug and there’s no need for initial event rate. So I think we’re fairly confident that year end 2012 should be a reasonable timeframe. Obviously, we have done a variety of analysis in terms of assuming a control arm living longer or the people are living lower, and we feel pretty confident that indeed, the study has adequate power to meet the endpoint. But let me remind you on the Allovectin 7 [inaudible]. The duration is 18 months and that’s pretty conservable function. If you just [inaudible] in the Phase II study, the [inaudible] that we had in the Phase II study, the chemo naive patients that we had, that number’s 22.5 months. But now you add to the fact that the modifications that we have done in that Phase III study and the modifications of the Phase III study are that they modified the resist criteria’s. So basing from that, more patients are going to – remember, drop-off rate in the Phase II study was almost 70% - 62%. Right, Alan, 62%. 62% drop-off rate. We modified the resistant criteria’s for the [inaudible] patient at least two cycles even if a lesion shows up. So more patients will be getting Allovectin 7 in that Phase III study. So we expect that number of 22.5 months to be even better. So you know, we have looked at both the upper bounds of the Allovectin arm, the upper bounds of the treatment arm, the lower bounds of the Allovectin arm and the lower bounds of the treatment arm and you know, within the bounds of our process, we think the study is adequately fine. Lee Olesky – Credit Suisse: That makes sense. And then shifting gears a little bit, I don’t know if you saw Amgen’s announcement a week or two ago, that T-Velma Cottrell data is not going to be coming out late this year. I don’t know if you had any thoughts on that?

No. We have no thoughts on that. We don’t know their recruitment criteria, what the prime improvement characteristics were, or why the deal is being – I know they made some modifications to trial, so I can’t comment on it. But I’ll tell you, you know, if you look at our program versus their program, how the delivery is done, how the agent is stored, I think the significant advantage both mechanistically to what we have done versus that program. Lee Olesky – Credit Suisse: Okay. Thanks. Appreciate it.

(Operator Instructions). We will take our next question from Steven Willey at Stifel Nicolaus. Steven Willey – Stifel Nicolaus: [Inaudible] transaction that you had conversations with the FDA and got feedback on TMV disease, not being an endpoint in the stem cell transplant study. I’m wondering if you were…

You think that’s good, right? Steven Willey – Stifel Nicolaus: I do think that’s good. Yes.

Thank you. Steven Willey – Stifel Nicolaus: With respect to any feedback that you may have got regarding the FDA’s stance on CMD disease in the solid organ setting?

No, you know, I think that’s still under discussion. That’s completely different from the stem cell piece. Stem cell was – energy right now is more on the stem cell. The study that we’re going to do is Phase II, not Phase III, so you know, there will be a couple of exploratory endpoints in that Phase II study. So the answer is, nothing is locked up in the Phase II design yet. Okay? Steven Willey – Stifel Nicolaus: And then is there anything embedded within the 1Q R&D number with respect – like possibly is it higher than what we’ve seen previously?

For research and development, there was nothing unusual other than the obligations that we had to [inaudible] for the $10 million payment from Astellas. Steven Willey – Stifel Nicolaus: Okay. Thank you.

We’ll take our next question from Nathan Kelly with Noble Financial. Nathan Kelly – Noble Financial: Hey, guys. Congrats on the continued success for Vical. I just had a couple quick follow-up questions. With respect to Allovectin 7, can you just remind us what the difference in the patient population is from the Phase II compared to the Phase III study?

The Phase II had chemo naïve, biodefractory, [inaudible] intolerant patients, chemo refractory patients. We found that the majority on the study, 11 out of the 15 responders were chemo naïve so the Phase III study, they’re normally the chemo naïve patient which are really patients with healthy immune systems. That’s really key. Nathan Kelly – Noble Financial: Thank you.

There are no more questions. Thank you, everybody, for joining on this call and we look forward to seeing you again in the near future. Thank you.

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