Stan Erck - CEO Buck Phillips - CFO Greg Glenn - President R&D

Joel Beatty - Citi Ted Tenthoff - Piper Jaffray Bill Tanner - Cantor Fitzgerald George Zavoico - JonesTrading

Good day, ladies and gentlemen and welcome to the Novavax First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. Now I would like to introduce your host for today’s conference Buck Phillips, Chief Financial Officer and Treasurer. Please go ahead.

Thank you, operator. This is Buck Phillips, I’m the Chief Financial Officer and Treasurer here at Novavax. Before we start our formal business, I would like to recognize Andrea Flynn, Novavax’s Director of Investor Relations, who is typically with us on this call, but will be unable to join us today. We’d like to congratulate Andrea and her husband Mark on the arrival of their brand new baby girl, Sydney. Okay, starting the call, I’d like to thank everyone for joining today’s call to discuss our first quarter 2017 financial results. A press release of our earnings is currently available on our website at novavax.com. And an audio archive of this conference call will be available on our website later today. Joining me on today’s call is Novavax’s President and CEO, Stan Erck, together with our President of Research and Development, Dr. Greg Glenn. Before we begin our prepared remarks, I need to 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 related matters, including expectations regarding revenue, operating expenses, cash usage and clinical developments and anticipated milestones are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. I’ll now turn the call over to Stan to begin today’s discussion.

Thanks Buck. So good afternoon everyone. Thanks for taking the time to dial-in to our call today. As usual I’ll begin the call with an overview and Greg will provide an update on our pipeline and then next Buck will review our financial results and after that I’ll open it up to Q&A. So first, I’d like to take a few minutes to set the tone of our communications for the rest of this year and beyond. Starting in the third quarter of last year, following the release of our Phase 3 RSV trial data in older adults. We made a delivered decision to hold back on press releases another pubic communication until we're able to take the time to start through our very large set of clinical data, an exhaustive review of published literature and meetings with KOLs. The goal of conducting this throw analysis we look to E301 trial, another previous trial is to better understand some very important questions including what is the impact of our vaccine and various measures of immune response and how does it differ when an adjuvant is used. What is the impact of the second dose of vaccine? How to immune response is differ in older adults compared to a younger population and for the analysis of all of our RSV clinical trial samples can we identify the factors that are useful indicators of a reduction of risk of RSV disease. Our goal was to answer these questions and apply our learnings to the unblinding of data from our current Phase II trial in older adults which we call our E-205 trial. I am pleased to say, so we are on track to meet or beat our commitment to announce top line results from this trial in the third quarter. Also when we announce this data we expect to be able to give context around the magnitude of immune responses we see and of critical importance the quality of the immune responses our vaccine elicits in older adults. We plan to announce these top line data in a conference call within the next 90 days, so that we have time to discuss the full implifications of our finance with you. Of course we will also plan to present these data at scientific conferences over the remainder of the year and beyond and to submit aspects of these data in peer review publications. With this extensive analysis of our Phase III trial and with our E-205 data expected soon I am pleased and eager to be back in front of our investors and potential partners in the near future. Before I talk about our prepare trial which is a global Phase III RSV clinical trial for infants by a paternal [ph] immunization I wanted to provide some preliminary information about market dynamics. In the three major markets meaning the U.S., Europe and Japan; RSV infection is the leading cause of hospitalization in infants with the greatest risk of hospitalization occurring in infants during the six months. In the U.S. alone there are over 1.4 million infections per year resulting in excess of 400,000 medical interventions and an annual economic burden of over $770 million. As you know we expect our vaccine to be administered to all pregnant women in their third trimester. We currently estimate our global peak revenues to be $1.5 billion just for the maternal products. In terms of the prepare trial and its ongoing execution we have currently met the regulatory requirements in 10 countries around the world to conduct this trial and have them actively enrolling and vaccinating third trimester pregnant women on an unprecedented scale. It is our policy not to publish or comment on specific enrollment numbers or case acquisitions, but I will say here that I'm very pleased with our enrollment activities. We have mentioned that we are working closely with the FDA as we conduct a prepare trial and that we recently engaged the FDA regarding the possibility of conducting an informational analysis timed around the end of 2017. The goal would be to understand whether the prepare trial data would provide an indication of the RSVF vaccine's potential efficacy against the trial's primary end point while maintaining the trial's blinded nature. This would give us confidence to accelerate other components of this program's development. Our communications with the FDA have progressed and as a result we are preparing revised study documents that align with the FDA's recommendations related to the statistical methodology for such an analysis. From my perspective, I'm confident that we will be able to appropriately conduct this informational analysis. So let me turn now to the potential partnering of our RSV programs. Last year I told you that we had a goal to develop a global commercialization plan with a pharmaceutical partner. We made a lot of progress in those discussions last year. However, based on the outcome of the Phase III trial in older adults last September these discussions were necessarily put on hold pending further data. Now with the analysis we've done over the last nine months combined with the data from the E-205 trial I expect to resume those discussions. Our objective is to find the best partner to support the remainder of our older adult maternal trials and support the global commercialization effort going forward. With respect to our RSV franchise I would point out that we remain the leader in this very important field. In maternal immunization we're in the phase 3 trial, while to our knowledge no other company has even started vaccine in pregnant woman with an RSV vaccine candidate. We would also continue to lead development in the vaccine for older adults as the industry leader and RSV vaccine development we recognize the importance of delivering on clinical trials results that support global license here and are working efficiently to do that and maintain our competitive advantage. Outside of RSV, I would like to mention that we continue to look forward aggressively with two vaccine programs based on our recombinant nanoparticle technology versus a Zika program and second is a novel influenza vaccine program. Both programs have goals of initiating phase 1 clinical trials later this year. Before I turn the call over to Greg to review the pipeline in detail I want to highlight another important component of our business, our proprietary suponment [ph] based adjuvant Matrix-M. use of Matrix-M is expanding significantly, as it's becoming an increasingly valuable part of our portfolio. One example to its use of a therapeutic genital herpes vaccine being develop by Genocea Biosciences. Genocea's HSV vaccine was recently awarded the world vaccine congress 2017 industry excellence award the best therapeutic vaccine and Genocea expect to enter Phase III human clinical testing in the fourth quarter of this year. Our Matrix-M adjuvant is an important component of this vaccine and we are pleased to be collaborating with Genocea on the continued development of this important new vaccine product. So in addition to the Genocea trial Matrix-M is currently or is expected to be in the near term, involved in a number of clinical trials including our own phase 2 RSV clinical trial on older adults, the E-205 trial I just mentioned. Our Phase I seasonal nanoparticle flu trial also in older adults, our Zika Phase I clinical trial, a one dose rabies vaccine being developed by CPLB which is our Indian joint venture with Cadila Pharmaceuticals. And in the recent development researches at the general institute at Oxford Universities are conducting a human challenge trial with a novel malaria vaccine candidate that uses Matrix-M as a critical component. And note that this trial has been funded by the Welcome Trust. This growing value of development in clinical experience is validating Matrix-M within the industry and opening up opportunities for future collaborations and value creations. With that I'll now turn the call over to Greg, to give you more details on the programs.

Thanks Stan and good afternoon to everyone on the call. Let me begin with an update on our prepared trial, the Phase II trial of our RSV vaccine that's designed to demonstrate protection of infants by maternal immunization to a number of 90 days flat. I want to remind you all that RSV is the most common cause of lower respiratory tract infections and the leading viral cause of severe lower respiratory tract disease in infants and young children worldwide. Despite the induction of post infection newly we could infection in lifelong [indiscernible] and currently there is no approved RC that is available. The Prepare trial supported by a grant of up to $89 million from the Bill and Melinda Gates Foundation. Their trials randomize, observable blinded, placebo controlled trial that group sequential design offering flexibility in trial size that is responsive to the rate of endpoint event and evolving evidence of efficacy, while maintaining and integrity of the blinded trial. The trial includes a single injection of our aluminum adjuvant RSV F Vaccine given between 28 and 36 weeks of estimated gestational age. The primary objective of the Prepare trail is to determine the efficacy of maternal immunization with the RSV F Vaccine against symptomatic RSV lower respiratory tract infection with an objective measure of medical significant, in the infants through minimum of the first 90 days of life. Participants are being recruited and vaccinated at global clinical sites based in the timing of each region’s RSV season. And the trial will include a minimum of approximately 4,600 participants. We are complete in the second year of outside the industry enrollment in South Africa, Australia, New Zealand, Argentina and Chile. All the manufacturing may decline in the trial of the monitors in unblended matter by daily Data Safety Monitoring Board or DSMB. The DSMB’ primary mandate is to look at evolving aggregate safety data in trial execution. Today, this group of nine international pediatricians and have met on in all situations that have 12 times on schedule basis most recently as April 2017. The former recommendations made by the DSMB after review of the data, each meaning have been to continue the trial with signal for the DSMB as little safety concerns. Safety variations by DSMB along with enrollment offers an important milestone for the prepared trial as we begin initiate enrollment in the third global season. Judging on what Stan said earlier, as we have what stands earlier, as we have as plan and in additional global season, in the U.S. and Europe capabilities. I’ll now move on to our RSV program in older adults. In January, we initiated Phase II clinical trial in this population, which Stan noted we refer to as E--205. The objective of this trail is to assess the safety and immunogenicity of one and two dose regimens of the RSV F Vaccine with or without aluminum phosphate or our proprietary Matrix-M adjuvant. The trial is a randomized, observer-blinded, placebo-controlled trial that has enrolled 300 older adults in the southern hemisphere. The trials been conducted in the southern hemisphere to avoid the ongoing RSV season in the northern hemisphere and to ensure that the immunogenicity results from the trail are solely resulting from the vaccine and not from natural infection from circulating virus. We expect the trial will determine the effect of adjuvantation and/or a two dose regiments on the quality and quantity of the RSV related immune response in older adults. The top-line results from the study are expected in the next 90 days. As Stan mentioned results from this trial will be interpreted in the context of our learnings from the previous RSV F Phase 2 trials, as well as the ongoing epidemiology studies and our significant discussions with key opinion leaders and field. We expect to use the E-205 results and augmented epidemiology data to map our path forward. And Stan is also mentioned, we plan to host the conference call within the next 90 days to release data in detail. Now moving on to our other programs regarding our group of vaccine. We are currently conducting pre-clinical animal study to establishing an understand of the potential of the vaccine that protects against infection. And we are focused on initiating the Phase I clinical data in this year. Regarding seasonal influence, as you know, we are continuing to develop recombinant nanoparticle of flu vaccine. We believe this construct will have numerous advantages over our previous VLP flu vaccines including greater purity, stability and importantly the ability to stimulate and broadly neutralize the antibodies. We have developed an adjuvant formulation using our own Matrix-M adjuvant that could compete or be differentiated from license in flu vaccine that target the older adult market. Initial pre-clinical data developed this into nanoparticle flu have demonstrated that we can induce broadly neutralizing antibodies. We plan to do this program into a Phase I clinical trial by the end of this year. Finally, I want to briefly expand on Sam's comments about our ongoing collaborations to support the development of a malaria vaccine undertaking with Jenner Institute of Oxford University. The investigators are leading experts in malaria vaccines and have undertaken clinical and pre-clinical studies with antigens discovered, manufactured and tested at the Jenner Institute. They are using Matrix-M as a critical component of a candidate malaria vaccine. They recently published a promising pre-clinical data in the Nature publishing group's scientific reports which showed enhancement of immunogenic and efficacy of their vaccine candidate based on the use of matrix M. As a result they progressed to a Phase II challenge trial in that study. Along with Novavax HSV vaccine development program, this data provided additional external validation of the value of Matrix-M as an adjuvant for improving the outcomes during the development of a wide arrays of vaccines. Thank you and I'll now turn the call over to Buck to review our financials.

Thank you Greg, today we announced financial results for the first quarter ended March 31, 2017. Summary financial statements can be found in today's earnings press release. We recorded a net loss of 43.9 million or $0.16 per share for the first quarter of 2017. This compares to a net loss of $77.3 million or $0.29 per share in the prior year period. Revenue for the quarter was 5.7 million compared to 4.2 million for the same period in 2016. This 35% increase in revenue in the 2017 period over the 2016 period was driven primarily by higher revenue recorded under the Bill and Melinda Gates Foundation grant of 89 million. As discussed in our prior calls the BMGF revenue is directly related to the operating activity in the prepare trial our Phase III trial of the RSVF vaccine to protect infants via maternal immunization. We are continuing to expect an increase in BMGF revenue in 2017 relative to 2016 which relates to the continue ramp in enrollment and increased level of activities in the prepare trial. Our R&D expenses decreased 45% to 37.7 million in the quarter compared to 69 million in the same period in 2016. The decrease in R&D expenses was primarily due to the decrease in RSV vaccine clinical trial activity in Q1 of 2017 relative to Q1 of 2016. Specifically the fully enrolled older adults Phase II and Phase III studies in the first quarter of 2016. We also experienced lower employee related costs in the first quarter of '17 relative to the first quarter of '16. G&A expenses decreased 16% to 8.9 million in the quarter compared to 10.5 million in the same period in 2016. This decrease is primarily due to lower professional fees for preclinical commercialization activity. As of March 31, 2017 the company had 211.2 million in cash, cash equivalent and investments on the balance sheet relative to 235.5 million on December 31, of 2016. The first quarter 2017 reduction in cash, cash equivalent and investments of approximately 24 million is the net result of two components. The Q1 '17 cash burn of 39.7 million which we define as cash use in operating activities plus cash use in capital expenditures, representing a 42% decline to the average quarterly burn in 2016. And proceeds realized from sales under the ATM agreement during the quarter. As fully detailed in our 10-Q filing the company sold 10.7 million shares of common stock between February 28 of 2017 and March 30, of 2017. Resulting a 4.6 million in net proceeds. The weighted average sales price achieved during that trading period was $1.43 per share relative to the view app over the same period of $1.39 per share. The highest and lowest weighted average a daily sales price per share realized during that trading period was $1.52 on February 28 of 2017 and $1.27 on March 21, of 2017. We have not made any sales or advertised any sales under the ATM since March 30 of 2017. We reiterate our 2017 cash burn guidance which we define as net cash used in operating activities plus cash used in capital expenditures. We expect cash burn in operations plus cash used in capital expenditures to be 80 million to 105 million lower than 2016. Based on current operations we are operating closer to the $105 million reduction target. This concludes my financial review I'll now turn the call back over to Stan.

Thanks Buck. So we all remain excited about our pipeline and our prospects for 2017 and beyond. And look forward to updating you on progress throughout the year and we I'll wrap it up here and open up to Q&A. Operator Q&A please.

[Operator Instructions] And our first question is from the line of Joel Beatty with Citi. Your line is open, one moment.

My first question is, do you anticipate the results from the analysis of the E-205 study to lead to changes in those things being needed for the maternal RSV vaccine?

No I don’t think so. It won't make any difference for the maternal vaccine at all I don’t think. So it will be just to determine what we think going forward with the elderly will be.

And then just last one question. Can you talk a little bit about the information you planned to collect from the informational analysis of the Prepare trail and how it’s difference from interim analysis? Thanks.

Hi Joe, it’s Greg. The informational analysis will have provided the indication of the potential efficacy here at the trial's primary endpoint and we’re going to use it and to provide planning information, so we can deploy resources and an expeditious way for our development program. So we can’t use it to change either the conduct of the trial or the protocol based in these analyses and because of this limitation it carries no statistical costs or Type 1 error. And we should note that this is be done by the unblinded by the DSMB and we simply will get a yes or no answer. So the interim analysis is obviously different and it’s in the protocol for some time and there as I think we’ve provided earlier. The former interim analysis we're defining success and can also the trial conduct, it is conducted with the Type 1 error cost and the fixed interim analysis will be conducted after medium of 3,000 women have been enrolled.

Okay. Speaking -- you mentioned that you could get a yes/no answer. Will you be able to get like pin points of where the primary endpoint is trending or is it just limited to those yes/no answer?

Yes. As a probabilistic statistical approach and we won’t be pin pointing any efficacy number.

Okay. Thank you for taking the questions.

Thank you. And our next question comes from the line of Ted Tenthoff with Piper Jaffray. Your line is open.

Great. Thank you very much. Actually in the past [technical difficulty].

I can’t hear you Ted.

Sorry. Can you hear me better?

Better.

Okay. Just what needs to be done for the Phase 1 studies for the Zika vaccine and the flu [ph] vaccine?

Look, the Zika vaccine were building the R&D, we’ve got some formulation studies and we’re expecting -- we’re getting guidance that we'll be able to start the trial in the lateral part of this year. With flu, it’s really kind of the same activity, we’re building the R&D for that, and we have some manufacturing and some pre-clinical study that are going go into that. So similar activities, pre-clinical package, talk/study package and the manufacturing PNC package have been built for both of those programs, we expect to start again towards the end of this year.

And how [indiscernible]?

Well, it’s a relatively small study in the Phase 1 safety and immunogenicity studies.

And the other magnitude with couple of hundred people each.

Great. Thanks so much. looking forward to the data.

Thank you. And our next question is from the line of Bill Tanner with Cantor Fitzgerald. Your line is now open.

Thanks for taking the questions. Greg, I have a couple for you. This as relates to the 205 data when it comes out, I don’t know if you can put some numbers around what would be good results, I guess, especially by comparison with some of the Phase 2 or the Phase 2 data that you released couple of years ago. And just as thinking about obviously couple of either unadjuvanted or adjuvanted with two different adjuvants and one or two doses. I mean it seems like sort of the Occam's Razor is the Matrix-M and two doses would be the best. So just kind of curious what you're looking for there in terms of getting the best response maybe with the least side effects, just couple of those two questions, thanks.

So you pinned down what we're going to look at, the safety immunogenicity is going to be compared to the reference formulation we've been using in the older adult program since really our Phase I trial, it was also used in the Phase II and Phase III. So you know I think when we give the call we’ll give some detail on what we've learned from the Phase III trial in terms of what we think matters. So you can tell then I don’t have numbers to give you on the kind of movement we're looking for. I think you'll find the analysis quite interesting and think we're looking forward to that. So yes Matrix-M you know in the two dose regimen is going to be of great interest to us and I think you pinned it down. We'll use the immunogenicity and safety data and again compared to your reference formulation to see what we select going forward and in the context of our Phase III analysis around the rich reduction with our immune response.

And you know as it relates to the antigenicity, how does that inform you in terms of going into a pivotal. I know the last, the other pivotal, the last trial I think it seemed to be beset by the problem of, the attack rate was lower. So these are maybe two sides of the same coin and one of them you want to make sure that you've got good immunogenicity and the other you want to make sure that you've got a good handle on what the attack rates for the two sides of the trial appropriately is that kind of the way to look at it?

I think we're looking to move the needle in an appropriate fashion for immunogenicity and I think our view of a clinical trial is we can adapt to the type of event driven trial that we have in maternal, so it can be an event driven maybe multi-season or [indiscernible] designed to allow have an event driven trial and avoid some of the quirks of the seasonality of RSV. We also expect in the coming months to be able to share some very significant epidemiology data through conversation with KOL and new studies and I think that together with our consultation with KOL is what'll have the better guidance on our plan forward.

And then maybe just the last question, as I must confess I haven't not very conversant in malaria vaccinology, so I guess I would think that that's either been looked at quite extensively in either cracked or maybe it’s been intractable, so maybe if you could sort of briefly profile where do you think the Novavax vaccine has a better shot?

That's a great question so there has been a lot of work done and people and old gray heads in this company had their finger in some of that work in previous iterations to their jobs. But there is a vaccine that's showing efficacy it was a vaccine using, I would say, suboptimal antigen in adjuvant and we were able to -- the program at the Jenner Institute is using that as a comparator with the mind that they need to have an improvement over that formulation. So it’s the vaccine that you would use the immune response to block the infection and you know the testing is going on in animals and then they do a human challenge study. So we're quite excited about the results, the adjuvants seems to be really important, that is given along with the antigen as they discovered there at the institute.

And our next question comes from the line of George Zavoico with JonesTrading. Your line is open.

A couple of quick questions I hope. The Southern hemisphere season when does that start and when does that end? And compared that to northern hemisphere so how far are we in the southern hemisphere season?

So just the U.S. for example it does, it's somewhat regional. But roughly speaking it's November to March, so around five months. In the Southern hemisphere, its more or less mirrors that, so roughly speaking it's April to August. And so reference to the Phase II trial we wanted to make sure that the incidents of new RSV infections which do induce immune response would not confound our ability to interpret our immunogenicity results which measure similar outcome. So that was why the Southern for that trial.

When all is said and done with the trial do you expect to have a pretty good geographical balance between Northern and Southern hemisphere?

Now you are talking about out material trial, and yes. We have both regional and local knowledge of RSV seasons in all these sites and as you probably know it’s such a prominent pediatric disease that the pediatric -- the clinicians there well aware of what the onset of the season is. So we have an important customized algorithm for the local sites to use, to taking into account both the onset and the termination as RSV.

And we're running the elderly now, you are talking about considerable amount of data, hope it's going to be logical as well as efficacy and safety of your own vaccine. That suggest that -- can you do this respectively and somewhat retrospectively with your Phase II data, but you suggest that now a lot of the data is known. So you put this trial and the list that you are doing in the RSV space and context that what was known previously in terms of the epidemiology and attack rate? We all know it has a big burden, but you seem to be providing for the first time or as close to the first time, number that can be applied to this.

I think we are going to have a very detailed presentation to come that will include some of the work on epidemiology some of additional conversations we've had with KOLs on epidemiology and then analysis of a very large body of data from our E-205 and E-301 trial and because I said all that would give us a lens on how to interpret the formulation selection we've made and hatch a plan forward. If could beg your difference, I think we'll get into that in some detail in the near future here.

I appreciate that, but I was just asking in terms of context, this sounds like there is a lot of considerable amount of information that nobody really had handle on before.

You are correct, that’s correct. We have charted new waters and we have learned a lot and I think it's been very instructive for us as far as the path forward.

Regular flu vaccine, the VLC that you are working with before, that was -- that included -- and the VLC included the newer amenities as well as the Matric portions. The new vaccine is only going to be [indiscernible]. And one of these issues that you talked about before, I was providing more universal sort of or durable protection, if they were anti-immunity antibodies which was develop as well. So I guess, this is now fallen off the table as it were with the new vaccine. Is that correct, this year it's just [Multiple Speakers]?

Yes. As we said the stability and immunogenicity of once now much more pure product is better. And so we recognized there are some value in immunogenicity [ph] respond. But the ancillary responses we are getting or broadly neutralizing and they’re quite protective, at least in each animal model. So we felt that those tradeoffs and then frankly, the critical component for this is the Matrix-M adjuvant which does a number of thing, it advances the immunogenicity overall, it seems to highlight the broadening neutralizing antibody epitopes quite nicely so you get more induction of that type of the immune response. And so given all that, we felt that the product going forward with the best choice with the many that went into that decision would be an HA [ph] based flu nanoparticle with Matrix-M.

And this is going to be applicable to all people? Elderly and younger people?

Yes. Right now, we’re targeting the older adults. We want to be competitor or superior to the currently licensed products they are targeting older adults. That’s our first goal, one would presume that if it works well in that population, it could be extended to other populations, but our focus is to get into the older adult with our vaccine.

Okay. And a question about the CMC for the Zika and the flu. Are you still [indiscernible] or have you vacated those?

Yes. So have completed the Zika manufacturing and we are building pre-clinical use of the rest of the package around that for the R&D and flu manufacturing is ongoing.

I think, George, it’s Stan. So the flu is -- actually we've made some dramatic improvements in the process in terms of purity and yields, and really quite pleased with where that’s going right now. So we’re in the process of making GMP material. This is now May that will be released in the summer.

Okay. Cool. And then finally one last question on the malaria vaccine. Are these the same folks that were working on the GSK vaccine that we saw the results on?

They have been working on the GSK vaccine, right. And they are, as you probably know the field studies have been promising, they've got some limitations and a big appetite to improve the efficacy of those vaccines. So I’m a believer in the vaccine that has been made, I think it's a big accomplishment in a very tough area, I also believe that the vaccine could be improve and [indiscernible] good taking good strides in that direction.

They're developing data that compares ours or -- Matrixes [indiscernible]. I believe we will, I think the data's going to come out pretty soon in humans and so we'll let them determine the timing of that, but I think we look quite favorable.

Are you contributing is there something to the Welcome Trust or are they purchasing it?

Well it's -- I don't Buck are we selling it to them or giving it to them?

They are purchasing it, in small amounts.

Small amounts.

Okay. Terrific, thank you that's it for me.

Thank you, and our next question comes from the line of Jessica Fye with JPMorgan, your line is open.

Hey guys this is Ryan on for Jess, appreciate you taking our question. Stan, I think earlier in your opening remarks you said you're pleased with enrollment activities and it sounds like there's a number of sites coming online so I know that you're not going to make too comments on it specifically, but you know does that -- sounds like you guys are at least are on track and maybe it sounds like you guys are even a little bit ahead of your expectations? Is that a fair interpretation of your opening remarks?

Yes, as my opening remarks said we don't comment on numbers of cases and vaccines, but we've opened up this figure where the first year was mostly I would say learning the operations of how to do something that's pretty complex, you got a mom and you got a kid being born, you got to follow everybody and just getting that set up in the U.S. and South Africa which is where we started was a big effort and it's really rolled into a second year that's manifold times enrollees over what the first year was and I expect the same will occur in the third year. So it's going well, we're projecting that we will have enough cases by the end of this year to do the informational analysis and for the interim analysis by the end of '18 which could lead us to a great place by the end of '18, so it's going fine.

Okay, great and Buck maybe a quick question on the cash burn reduction versus '16 you know you said you guys are probably closer to the $105 million and is there any additional sort of in the pushes and pulls that are kind of putting you towards that, is that the Phase I studies for the seasonal flu and Zika studies or how do we think about sort of some of those factors that are impacting that you putting you closer to that end of the range?

I think when we came out at the beginning of the year we provided a range as you know on the 2016 earnings call on February 28th, we actually upped the range for greater savings relative to last year's burn, I think as we work through the year and we get quarters behind us, we're able to get greater granularity and visibility on what that total year number will be. We do some conservative planning around here, so obviously as we execute against that conservative planning and look for other ways to save some money, we do save that money, I will state that the Phase I Zika and the Phase I Influenza trial are included in the guidance that I provided, the cash burn guidance so those expenses are included.

Okay, great, thanks for taking my questions.

Thank you, and ladies and gentlemen this concludes our Q&A session, I will turn the call back to Stan Erck, President and CEO for his final remarks.

Okay, so thanks for listening, number one. Number two, I have said it in the beginning I am excited about the rest of the year. We are going to have a lot of things to talk about, data and progress and it's nice to be in this point again and so we look forward to coming around and seeing some of you folks as we get on the road as well, looking forward to. So thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may all disconnect. Have a wonderful day.