Good day, ladies and gentlemen, and welcome to the Novavax Q4 and 2011 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host today, John Herrmann. Please begin.

Good morning, and thank you. This is John Herrmann, Vice President and General Counsel of Novavax. I thank you for joining us on today's fourth quarter 2011 financial results conference call. Both the earnings release from this morning and an archive of this earnings call can be found on our company's website Novavax.com. On today's call are Novavax's President and CEO, Stan Erck, and members of our Executive team. Before we begin our prepared remarks, I'll remind you that we will be making forward-looking statements during this 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 matters, including expectations regarding revenue, operating expense, cash usage, clinical developments and anticipated milestones, are all 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, that change over time. Further information on the factors and risks that affect Novavax's business, financial conditions and results of operations are contained in Novavax's filings with the SEC. These are all available at www.sec.gov. These forward-looking statements speak only as of the date of this call and Novavax assumes no duty to update such statements. With that said, I will turn the call over to Stan.

Thanks, John, and good morning, everyone. Thanks for calling in. I'd like to spend a few minutes discussing our progress over the last quarter and year and I'll follow that with a discussion of our plans for 2012. So over the last year, the company's made a couple of high-visibility announcements, notably the signing of $179 million contract that will fund our seasonal and pandemic flu programs for the next several years, and more recently, the superb data that we got from our RSV vaccine trial announced in October. Though both of these announcements were obviously important, what's equally important, but gets much less visibility, is the complete restructuring of the entire company with the addition of a new management team at all levels within the company. And the internal focus over the last year on building robust, commercializable manufacturing processes and quality systems. In parallel, we have built regulatory clinical teams with experience in late-stage clinical development and regulatory filings from Phase I through product licensure. These accomplishments will serve as the base upon which we carry our product development efforts forward. I believe that we entered 2012 in our strongest position ever to realize the clinical and commercial potential for our vaccine technology and pipeline. From a business development perspective, last year, we landed 2 U.S. government contracts, the $179 million BARDA advanced development contract to develop seasonal and pandemic influenza vaccines. The strategic importance in winning this award cannot be overstated, so now, it provides us the financial underwriting to take our seasonal and pandemic influenza vaccines through late stage testing and BLA filing. We also were rewarded a multiyear contract with the U.S. Department of Homeland Security to develop a VLP vaccine counter measure to protect the United States from foot-and-mouth disease. On a commercial level, we launched a new collaboration with LG Life Sciences of Korea to apply our VLP vaccine technology to markets in Korea and specified developing countries, and we continue to build our joint venture in India with Cadila Pharmaceuticals, as evidenced by the announcement of preclinical progress of our new rabies vaccine. From a clinical and regulatory perspective, we presented our clinical findings in medical and scientific conferences throughout the year, including the 7th WHO meeting on pandemic influenza vaccines and clinical trials, at which we presented the final positive results of our H1N1 VLP vaccine study in Mexico. We also published results from this study in general vaccine and the results from Phase I2, which is a H5N1 pandemic influenza study in the Journal of Virology. In the first half of 2011, we conducted a Phase I clinical trial with a third vaccine candidate targeted against respiratory syncytial virus, or RSV, and showed excellent results in our blinded placebo-controlled escalating dose study in 150 healthy adults, from 18 to 49 years of age. We presented interim top line data from the trial in October at the 5th Vaccine and ISV Annual Global Conference and reported that our results were consistent with preclinical studies and showed that the vaccine was well-tolerated and had no systemic side effects. As importantly, the vaccine candidate was highly immunogenic and produced functional antibodies that neutralize RSV. The antibody response to the RSV-F protein was significantly increased, compared to placebo and all groups, and increased by 19 fold in the highest dose group at day 60. Needless to say, we're very excited about these results and the potential of this vaccine candidate as a prophylactic solution for RSV in both the pediatric and elderly populations. Let me remind you that RSV is the leading cause of lower respiratory tract infections in infants and young children as well as the elderly. In infants, RSV is the leading cause of hospitalizations in the U.S. On a global basis, the disease burden is estimated at 64 million cases and a 160,000 deaths every year. The need for a vaccine is greater than ever. There are no vaccines approved today to prevent RSV and current treatments are often inadequate, cumbersome and expensive. This is a very important program for Novavax and it addresses a critical public health need globally. From a personnel and infrastructure perspective, we have made great progress. I'd like to spend a couple of minutes focusing on the details of this because we spent over 1 year recruiting a first-class team. While every department within the company is a key to our success, I'd like to focus on a few areas that are particular importance when developing new vaccines. So let's start with manufacturing. Overseeing manufacturing process development engineering and facilities is Dr. Tim Hahn. Tim brings tremendous experience for MedImmune where he was involved in their FluMist vaccine and Synagis anti-body programs, preceded by 15 years at Merck in various roles of increasing responsibility in manufacturing. Tim has been involved with both commercial products and products in clinical development. Working with Tim are Dr. Erica Shane, VP of Process Development and Merv Hamer, VP of Manufacturing. Erica ran process development at MedImmune for 17 years, and is an expert in the ins and outs of early-to-late-stage product development. Merv also has a long career of managing manufacturing and operations of various companies from Alza, to PATH, then Intercell. Alza's development and manufacturing work hand-in-hand with quality assurance in order for us to assemble a package for a submission to regulatory agencies such as the FDA. Dr. Jane Halpern, VP of Regulatory Affairs, runs these areas. Jane joined us after 10 years at the FDA Biologics division, CBER, followed by industry experienced running regulatory and quality functions at GSK, ID Biomedical and Genocea. And finally, as we have products into the clinical study, we need strong clinical trial planning and execution. Dr. Lou Fries, VP of Medical Affairs, heads up our clinical strategy and works with Nigel Thomas, Executive Director of Clinical Operations, who is an expert at running clinical trials worldwide. Lou's career spans from, most recently, head of the GSK Pandemic Flu program, also sponsored by BARDA, and previously, as head of Clinical affairs at ID Biomedical, where he was instrumental in the development and FDA approval of their flu vaccine in the U.S. These are a few of the people that we've added in the last 10 months that are now working as a team to bring our product candidates to commercialization. So turning to 2012 and beyond, we'll need the capacity to develop processes and make product for at least 3 vaccines. One of which is a quadrivalent flu vaccine requiring 4 production runs for each clinical trial. This is very important, since just 1 week ago, the FDA approved the first egg-based quadrivalent vaccine, which is a clear sign where the industry is headed, and we are also now positioned to be there. As we announced late last year, we've acquired the ability to do this through the negotiation of a very favorable long-term lease arrangement to occupy 74,000 square feet of manufacturing, laboratory and office space, in 2 facilities in neighboring Gaithersburg, Maryland. The main facility will become the primary commercial scale manufacturing facility for production of our vaccines and will provide twice the production capacity for our current facility so we can meet our projected clinical and commercial supply requirements for the foreseeable future. Because of these achievements last year, we now have the technology platform, the people and the physical plant to become a commercial vaccine company. So now let me speak about what you can expect for us -- from us in the rest of 2012. On the strength of the 2011 achievements, last week, we initiated a Phase II trial in the Southern Hemisphere to select the optimal dose of our new quadrivalent seasonal flu, VLP vaccine. We'll provide in early quarter 3, top line clinical data from this trial. At the conclusion of this trial, we will conduct a does confirming Phase II trial later this year in young and elderly adults. These studies represents the last Phase II trials planned, prior to our end-of-Phase II meeting with the FDA in 2013. In addition, we're now preparing to launch in the second quarter, 2 Phase I studies of our H5N1 pandemic influenza vaccine candidate with multiple adjuvants and we expect top line clinical data in the second half of this year. All this work will be performed and paid for under the BARDA contract. With respect to RSV, we're planning to advance our RSV vaccine candidate into 2 Phase II trials in both elderly adults and women of childbearing age. These separate trials will be conducted with and without an adjuvant and will provide both safety and immunogenicity results in these different age populations. As we have indicated in the past, there continues to be a strong interest in partnering this vaccine and we will continue to explore these strategic initiatives. We will remind you that RSV represents one of the largest vaccine markets globally, and there is no vaccine currently available. Our market analysis suggested sales of this product could exceed $5 billion globally. This is a product that we feel will attract the attention of larger pharmaceutical companies who will be instrumental in helping us to commercialize the product around the world. In 2012, from a manufacturing process development perspective, we will continue to move towards: One, locking down our production process at a commercial 10,000-meter scale; two, preparing for an inter Phase II meeting with the FDA in 2013; and three, for manufacturing material for the launch of our Phase III trial in late 2013. So in summary, let me leave you with these key take away points. First, Novavax now has 3 promising vaccine candidates undergoing 6 clinical trials with a wealth of clinical data coming in 2012. Second, we have the funding from BARDA to take our influenza vaccines through late-stage testing and BLA filing, which provides a tremendous financial benefit to us; third, our RSV vaccine candidate represents significant value to the company; and finally, we're advancing international collaborations in India and Asia and now have the needed U.S. manufacturing laboratory and office facilities to support our expansion in commercial plans. With a stronger team in place to build on this record of success, 2012 promises to be another very productive year for our organization. Financially, we've made significant progress in reducing our net loss and improving our liquidity and cash usage position. Now, I'll turn the call over to Fred, to review our fourth quarter and year-end 2011 financial results. Fred?

Thank you, Stan. For the fourth quarter of 2011, we reported a net loss of $3.7 million or $0.03 per share compared to a net loss of $6.3 million or $0.06 per share for the fourth quarter of 2010. For the full year 2011, we reported a net loss of $19.4 million or $0.17 per share compared to a net loss of $35.7 million or $0.34 per share in 2010, almost a 50% reduction year-over-year. The primary reason for the decrease loss in the quarter and full-year was the recognition of revenue under the BARDA contract, which we expect will generate significant revenue for us in 2012. Fourth quarter operating expenses were $10.1 million as compared to $7.1 million in the fourth quarter of 2010. For the full year 2011, operating expenses decreased to $36.3 million compared to $38.8 million in 2010. The decrease in operating expenses for the full year was primarily due to lower outside testing costs as a result of fewer clinical trials ongoing during 2011 as compared to 2010. This was partially offset by higher expenses associated with the BARDA contract. For 2012, we expect a significant increase in research and development expense due to increased clinical trial activities. As of December 31, 2011, the company had $18.3 million in cash, cash equivalents and short-term investments compared to $31.7 million as of December 31, 2010. The reduction in our cash position from 2010 primarily occurred in the first half of 2011, since reimbursement under the BARDA contract did not begin until the second half of the year. However, with the full funding of the BARDA contract in place, in the second half of 2011, we were able to significantly improve our cash position. So we amplify that point. Our cash used from operating activities dropped from $17.4 million in the first half of 2011 to only $6.2 million in the second half, or a 65% drop in cash used. We expect this reduced cash usage rate to continue in 2012, again due primarily to our BARDA contract for influenza, but this will be partially offset because of higher R&D expenses associated with our planned trials in RSV that are not fully funded externally at this time. Overall, we have ended 2012 in a sound financial position with the available resources to move all our programs forward. That concludes our prepared remarks. Operator, we'll now open the call for questions.

[Operator Instructions] Our first question comes from Bill Tanner with Lazard Capital Markets.

I do have a question for you, Stan. Just as it relates to the RSV vaccine, can you remind us of the intellectual property on that and then also as it relates to commercialization, I understand maybe needing a partner for rest of world but is that something that would be feasible commercially for Novavax, I guess, to at least undertake the domestic part of the commercialization?

Yes. With response to the intellectual property, we have a string of intellectual property filings that, we believe, will give us complete protection in all global -- all important global markets. Number two, with respect to the commercialization strategy and partnering, I think, this is a product that is of interest, I think, to all regional and global vaccine companies. It represents a real opportunity because there are no RSV vaccines in the marketplace. I think that we will pick our partners carefully. We clearly need, as a 113-person biotech company, we will need help in commercializing the product and we'll select our -- as I say, we'll select our marketing commercialization partner, both on the regional and global basis.

Okay. And then maybe just on -- how should we think about then the -- just the seasonal opportunity in terms of, obviously, very competitive environment and just kind of thinking about how you're quad seasonal vaccines might not fit in there.

Yes. We think the seasonal vaccine represents -- we have some advantages over the competing egg-based products including -- we have the potential of having a vaccine that will be first to market. We think we'll be competitive on the cost of goods sold basis and we think we will be able to enter the marketplace, particularly in the United States, we could likely enter the market ourselves. I think we'll still need a global partner and -- but the advantage that we now have is we have a financial pathway all the way to commercialization through our BARDA contract and we can make that determination as we get closer to the commercialization stage of the product.

Our next question comes from George Zavoico with MLV & Co.

Congratulations on a good quarter in putting together a what appears to be a pretty robust clinical development plan for 2012 and that leads to my first question. You guys had the BARDA contract now for almost 1 year, and it's taking a while to launch the first trial, which just came out a couple of weeks ago. Could you just explain a little bit, I mean, I understand that were a tremendous amount of changes from when the contract was first applied for, including the change to quadrivalent and you've also mentioned using a number of different adjuvants now, which you haven't used before in your VLP trials. So could you just review briefly what kind of discussions you've had with BARDA since the original application, and now the formation of what appears to be a pretty robust clinical development plan?

I'd be happy to. So originally when we responded to the RFP, I wasn't here but if I recall correctly, we put in the RFP in the first half of 2009 and -- or we prepared it in 2009 based upon the plan to make a trivalent vaccine and through the process, the time that it takes to go through a review and approval, you're right, it was 1 year ago, February 24, that we got the contract. And the first thing we do with the contract is then to update the what the clinical -- production in clinical development plan would be. That took the first quarter of the contract to work with BARDA, get everybody's buy in as to what the right strategy was. And, as you can see, we all agreed that developing a quadrivalent vaccine for seasonal flu was the right strategy because that's where the market -- we felt that, that's where the market was going to turn and it turns out, we're correct. To do that requires in the background and the manufacturing and process development, developing a larger scale process for manufacturing not just 3 flu strains, but getting a fourth strain up and running and in the formulation. So that necessarily took some additional months, so we decided to delay the clinical trial from what was originally going to be the fourth quarter of last year and put it into Australian, Southern hemisphere in the first quarter. So I think that was the wise choice to make with BARDA. Now we, as you said, we have a robust pipeline of clinical trials going on in the next 12 months leading Phase III by the end of next year. With the pandemic, I think, that was the same thing. We wanted to develop a clinical plan that would lead us to licensure. We wanted to use the best adjuvants at our disposable and so we now have trial plans that were not anticipated in the original filing that allows us to compare competing adjuvants and then down select based upon human clinical data that we get in the second half of this year.

Are these adjuvants that Novavax has develop or working on or are these adjuvants that you're going to have to license in?

So we have candidates that include both and we're not able to disclose the license bid in adjuvants right now.

Okay, okay. With regards to the executive team, this is a pretty high-level team, and congratulations for attracting these folks but there's, I guess, an expense associated with such high-quality people. Can you comment a little bit about on how that might affect G&A or R&D expenses, depending on where these people are -- their work is allocated to?

Yes. So, yes, to get good people, you have to pay competitive compensation packages. I think that what you do, in my view, in a biotech company, everything is centered around time and more effectively you execute your plans, the more money you save. And we will save lots of money by having a team that can get product developed quickly.

George, this is Fred. I'd also add to Stan's point is that it's important to note that all of the people that Stan mentioned in his prepared remarks, actually are on the roster with BARDA and all of those people are people that actually whose time is actually billed as part of the influenza program to the government. So these types of cost were all embraced under that agreement.

Our next question comes from Ted Tenthoff with Piper Jaffray. [Operator Instructions] I'm not showing any other questions in the queue. I'd like to turn it back over to Stan Erck for closing comments.

Okay. So we thank you for taking the time to call in and listen to the report today. We look forward to providing an update on the programs in 90 days. Thanks a lot.

Thank you, ladies and gentlemen, and thank you for participation in today's conference. This does conclude the conference. You may now disconnect. Good day.