$NVAX Novavax Q2 2024 Earnings Conference Call

good morning and welcome to Novac second quarter 2024 Financial results and operational highlights conference call all participants will be in listen only mode did you need assistance please signal the conference specialist by pressing star followed by zero after today's presentation there will be an opportunity to ask questions to ask question please press star on your uh star one on your touchtone phone to withdraw your question please press start to please note this event is being recorded I would now like turn the call over to your uh speaker today Erica Schultz senior director investor relations please go ahead good morning and thank you all for joining us today to discuss our second quarter 2024 operational highlights and financial results a press release announcing our results is current ly available on our website at nova.com and an audio Archive of this conference call will be available on our website later today please turn to slide two before we begin with prepared remarks I need to remind you that this presentation includes forward-looking statements including information relating to the future of novax its key strategic priorities statements related to potential royalties and Milestones operating plans objectives and Prospects full year 2024 Financial Guidance the amount and impact of Nova va's cost ruction plans its future Financial or business performance conditions or strategies its Partnerships anticipated timing and outcome of future regulatory filings and actions and the ongoing development marketing opportunities manufacturing capacity and future availability of our vaccine candidates and key upcoming mil Stones each forward-looking statement contained in this presentation is subject to risk and uncertainties that could cause actual results to differ materially from those projected in such statements additional information regarding these factors appears Under The Heading cautionary note regarding forward-looking statements in the slide deck we issued this morning and Under The Heading risk factors in our most recent form 10K and subsequent form 10 qes filed with the Securities and Exchange Commission available at www.sec.gov and on our website at nova.com the forward-looking statements in this presentation speak only as of the original date of this presentation and we undertake no obligation to update or revise any of these statements please turn to slide three this presentation also includes references to a non-gap Financial measure which is forward-looking information for R&D and sgna expense as adjusted for expense reimbursement from santae under the santae agreement please turn to slide four joining me today is John Jacobs our president and CEO who will provide an update on our progress during the quarter and highlight our four key value drivers additionally John trosino our president and chief operating officer will provide an update on our operating activities and Dr Bob Walker chief medical officer and interim head of research and development will discuss our clinical development and pipeline finally Jim Kelly our Chief Financial Officer and Treasurer will provide an overview of our financial results and implications of the Santa Fe partnership I would now like to hand over the call to John Jacobs thank you Erica and thank you everyone for joining us I'm pleased to be with you today along with the members of our executive team to highlight our recent achievements progress on our annual priorities and the shaping of a new vision for novax when we spoke with you last quarter we were taking the first steps on this exciting Journey with the announcement of our Global partnership with copi our collaboration with copi has allowed us to monetize the value of our covid-19 vaccine and proven technology platform and frees up resources to develop multiple opport unities in the vaccine space since then we have worked hard to execute on our objectives and are beginning to position the company back toward its roots as an innovation driven organization while remaining a close commercial partner to copi for our covid-19 vaccine we are beginning to evolve from a company that is independently manufacturing Distributing and commercializing vaccines on a global scale to a much more efficient and focused R&D model this means that we intend to drive future value from additional Business Development activities and organic R&D via our proven and validated technology platform with plans to unveil a new and expanded clinical pipeline by the end of this year and to seek to execute our plans within a much leaner operating model in 2025 and Beyond the potential value drivers of our business are outlined on Slide Five and include value driver 1 the copi partnership value driver two late stage pipeline value driver three leveraging our proven technology platform to drive additional Partnerships and Deals and value driver 4 a new early stage pipeline it is Our intention that these potential value drivers will be supported by an appropriately scaled infrastructure with significantly reduced expens versus our 2024 Baseline Jim Kelly will provide more detail and Clarity on our expense projections later on in the call so let's take a moment to expand on each of these potential value drivers that are intended to be the foundation of our new growth strategy for no noac value driver one the Santa partnership the Santa partnership has four potential areas of value first immediate upfront payment and Equity investment of approximately $570 million next midterm Milestones related to our partnered covid-19 vaccine of approximately 30 $50 million and sf's independent flu covid-19 combination program were another $350 million third anticipated royalty streams from both of these programs and fourth long-term royalties Andor Milestones from any other vaccines developed by sanfi utilizing our covid-19 vaccine and or our Matrix M adant that means for example any additional combination vaccine commercialized using our covid vaccine is eligible for royalties also any new vaccine developed using our Matrix m adant is eligible for both milestones and royalties that being said the partnership structure offers potential opportunities for decades to come and because Santa is a global leader in vaccine development and commercialization with a substantial presence and proven track record in seasonal respiratory vaccines in the US and around the world we have the utmost confidence in their ability to perform when they begin commercializing our covid-19 vaccine next year and potentially launch multiple additional vaccines using our technology in the future we look forward to providing further updates on our partnership at the appropriate time value driver two Novac late stage pipeline as we have stated on prior calls we are on track to independently initiate our own late stage phase three trial in the fourth quarter of this year to evaluate our Standalone influenza and covid-19 influenza combination vaccines Topline data from this trial is expected by the middle of 2025 these assets have already demonstrated promising phe 2 data we intend to partner or monetize these assets assuming successful phase 3 results rather than commercialize them ourselves which should allow us to avoid significant infrastructure expense and execution risk moving on to Value driver 3 leveraging our proven technology platform to drive additional Partnerships and Deals beyond the two late stage assets our proven technology platform has the potential to offer other companies significant value and our ambition is to be a partner of choice to help others enhance or even expand some of the established inline vaccine franchises of larger players for example we believe that Matrix M can help enhance many existing vaccines in the portfolios of other companies by boosting immunogenicity and lowering cogs without adding to the side effects burden later in this call Bob Walker will share some new data with you as an example of this capability these Matrix M attributes may also enable companies with clinical stage vaccine portfolios to make those vaccines more competitive as they strive for the best product profile and even allow for the creation of new vaccines that might not have otherwise been possible possible we continue to explore the potential of our technology and believe that we have only just begun to tap into the value of our platform to our company and portfolio and to that of other vaccine companies and finally value driver four new early stage pipeline our final and fourth potential value driver is the development of our own early stage organic pipeline rather than focus our efforts on seasonal commercial commercial execution of single vaccine asset we will instead invest our time energy and capital on the development of an expanded pipeline that uses our recombinant nanoparticle technology platform to develop new assets focused on infectious disease and respiratory as well as potentially vaccines in other disease or areas and categories we will be looking to develop assets that we believe can make a significant difference for Global public health and at the same time present a significant commercial opportunity we reserve the right to develop launch and commercialize any of these assets ourselves should the emerging data and business case support it for the remainder of 2024 and in line with our key value drivers we will continue to execute on our four priorities which you should be see on slide six and these priorities are priority One the successful execution of our new partnership with santae priority two driving incremental value from our technology platform via the initiation of our phase three trial for kick and flu the development and unveiling of our new refreshed Pipeline and pursuing new business development opportunities priority three continue to reduce our R&D and sgna costs in line with our prior stated targets and prepare for additional significant reductions to scale and cost as we enter 2025 and Beyond and finally priority four delivering our updated covid-19 vaccine for the 2425 fall vaccination season as we enter the second half of this year we look forward to sharing more details on our updated plans as we continue to forge A New Path forward now I would like to hand it over to the team to discuss our results from the quarter in more detail beginning with John troso for our operating updates John thank you John Q2 was another quarter of progress for the business as we continue to lay the groundwork for a successful new vvid co-c commercialization effort with Santa beginning in 2025 and with a 2425 season start less than one month away we have continued to lay the groundwork for success by updating and filing for authorization of our updated covid-19 vaccine formulation please turn to slide 8 in the US as John mentioned we are concentrating our commercial efforts for the remainder of the year on our largest Market the US this should enable us to drive continued cost savings starting this season and continuing into 2025 and Beyond as we wind down our independent commercial presence in markets around the world in anticipation of sanify taking the lead on commercialization of a covid-19 vaccine starting in 2025 turn to slide 9 for the first time we expect our product to be available in a pre-filter ringe in the US the product will be arriving in the US this month and will be held in our warehouse as we await authorization before we can begin distribution turn next to slide 10 we have adopted a highly targeted commercial approach and will focus on the retail pharmacy Channel where over 90% of administrations occurred last season we have secured contracts with CVS Pharmacy R Aid Walgreens Costco as well as Regional Grocers and independent pharmacies and are and thus are tracking towards a significantly increased availability compared to last year we have already initiated preseason marketing efforts to build upon last year's campaign to drive increased awareness of new vacinated please turn to slide 11 in Europe given our upcoming transition of primary commercial responsibilities to santae we plan to conduct a lean limited and targeted commercial launch in the region while still maintaining the necessary operations to ensure santae is well positioned in Europe to execute beginning in 2025 this means we are focused on delivery of our updated vaccine in select European markets including Germany Italy and Poland we are already actively engaged in planning and partnership execution activities in the US and Europe with the goal of creating a springboard for long-term value creation via enhanced Santa commercial sales of nuvid while at the same time streamlining our own commercial execution for the upcoming season the APA contracts we have been managing since the pandemic played an important role over the past few years in helping to manage vaccine distribution and access for millions of potential consumers around the world as the pandemic has moved to annual seasonal vaccination and vaccination rates around the world for Co have dropped we are working with our government customers to renegotiate adjust or where appropriate exit these agreements while preserving as much of their value as possible to recap we remain intently focused on and are well on track for a more successful us vaccination season than we experienced last year with anticipated FDA authorization of our 2425 formulation ahead of the fall campaign manufacturing underway of our competitive pre-filled syringe presentation continued Traction in driving retail availability and increased product awareness we have all the components necessary for a better performance this 2425 us vaccination season launch which we are confident will serve as a foundation for continued new vacit uptake in 25 and Beyond under santae now I want to turn the call over to Bob to discuss our research and development updates please SL uh please turn to slide 13 thank you John I'm going to present key updates and highlights from our research and development activities from the last quarter which support the four key value drivers John outlined earlier I'll discuss the 2425 covid-19 strain change our kick and influenza programs our efforts to expand potential opportunities for Matrix M and our internal preclinical pipeline please turn to slide 14 with regard to our covid-19 vaccine and the 2425 strain change we were pleased that the CDC renewed their recommendation for Universal vaccination for everyone 6 months and older for the upcoming season with the updated vaccine and did not differentiate among among manufacturers or vaccine strains our updated vaccine which uses the jn1 strain often characterized as the trunk of the tree from which the currently circulating variants emerged is well positioned to compete with the Mr mRNA vaccines this fall in light of the guidance issued by the leading Regulatory and policy bodies we submitted our regulatory packages for the strain change to both FDA and EMA in June and we continue to work with The Regulators to facilitate a smooth review and approval in the effort to have our vaccine available early in the vaccination season and as you've already heard from John our updated vaccine is on track to be in warehouses this month and is expected to be ready for distribution upon authorization please turn to slide 15 we can continue to monitor the performance of our jn1 vaccine against new variants in non-clinical studies our data indicate that our vaccine targeting jn1 should provide acceptable coverage for the currently circulating variants this slide shows neutralizing antibody responses with jn1 vaccine in reesus macx you can see that the antibody tighter are robust across the spectrum of variants and this includes the kp3 and KP 3.1.1 variants that are now widely circulating using these data when we look at antigenic distance among these variants shown in the table to the right we see that in all cases the antigenic distances are below 2.0 antigenic units indicating that the variants are all antigenically similar to jn1 and that has been the consistent observation since we've started this monitoring which we intend to continue to do for each newly prevalent variant throughout the season so as you can see our data indicate that our vaccine targeting jn1 should provide acceptable coverage for the currently circulating variants please move to slide 16 as John outlined our second value driver is our late stage pipeline which has the potential to deliver vaccine candidates our phase three immunogenicity trial for our standalone influenza and kick vaccines remains on track to start in the fourth quarter of this year with Topline data expected by the middle of 2025 we have alignment with FDA on the use of a single phase 3 immunogenicity study for both kick and influenza programs and are still in dialogue with them on the feasibility of the accelerated approval pathway for both products we look forward to bringing you additional updates as we continue to advance these programs potential timeline and Pathway to registration will be dependent upon full alignment with FDA and the results of the trial as a reminder data from our Phase 2 study demonstrated that our kick vaccine induced anti anti-influenza neutralizing antibody levels in the top three plots hii antibody levels in the bottom three plots and anti-spike neutralizing anti antibodies bottom left that were generally comparable if not higher than levels achieved after after either of the comparator vaccines we believe these results give us more confidence in the program and in the feasibility of an accelerated approval pathway for either or both vaccines depending on Final data readout in preparing to move into phase 3 we have received FDA concurrence on the conduct of a single phase 3 immunogenicity study for both kick and Standalone influenza vaccines the trial will be conducted in older adults in the southern hemisphere in Australia and New Zealand during the off season the FDA recommendations we have received during the pre-ind process are being incorporated into the trial and we expect that with an anticipated fourth quarter start we should have Topline data by the middle of 2025 to enable internal decision making and potential partnering please turn to slide 18 now I'd like to turn our attention to our proven Tech platform our third value driver and to recent pre-clinical work aimed at expanding the utility of Matrix M our saponin based Adent because we know that Matrix m is a potent Adent for our nanoparticle viral vaccines we decided to investigate whether Matrix could boost immune responses in other vaccines such as an inactivated influenza split virus vaccine already licensed the results I'll show you indicate that Matrix M increases the magnitude and breadth of antibody responses when given with a licensed egg-based influenza vaccine with the potential to produce a more potent more highly protective vaccine in the figure on the left are egg haai responses in mice vaccinated with a licensed inactivated quadrivalent influence vaccine in the left floor bars and inise vaccinated with the same vaccine plus Matrix in the right four bars responses to all four influenza strains are boosted in the vaccine plus Matrix Group in the figure to the right competition binning experiments against a panel of monoclonal antibodies demonstrate that Matrix induced antib IES directed to conserved epitopes in the ha resulting in broader crossreactive responses these data demonstrate one of the most important attributes of Matrix its ability to increase the magnitude and breadth of antibody responses with the potential to produce a more potent more highly protective vaccine please turn to slide 19 but what about the potential for Matrix M to enhance the activity of nonprotein and non-viral vaccines bacterial capsular polysaccharides are known to be poorly immunogenic vaccine antigens especially in infants and young children and we wanted to explore whether the benefits of Matrix could be extended to bacterial vaccines in this experiment mice were vaccinated with a pacle vaccine either with or without Matrix added and anti- numac IGG antibody titers were increased over 8 Eightfold in mice that receive vaccine plus Matrix a similar adant effect was observed when looking at functional antibodies that mediate subtype specific killing or opk a known correlate opk responses were increased 2.6 to 7.5 fold in mice that receive vaccine with Matrix for the four subtypes shown on the right and notably the subtype with especially low immunogenicity subtype 23f at the bottom right showed the greatest increase 7.5 fold with the addition of Matrix these preliminary data I've shown you suggest that Matrix could play an important role in augmenting certain currently available vaccines such as influenza and Paco vaccines by increasing the quality and duration of immunity reducing the amount of antigen needed per dose and lowering manufacturing costs our data also suggests that the repertoire of antigens that could be combined with Matrix for clinical benefit could perhaps be expanded to include bacterial polysaccharides which we regard as an exciting area for more research we believe that these Matrix attributes could be attractive to partners with established vaccine franchises please turn to slide 20 finally I want to discuss our new early stage pipeline which is our fourth value driver as you heard we are in the middle of a strategic assessment of our technology platform to determine how to best expand and refresh a new Full product pipeline for novax and we are excited about the new initiatives that may spring from that review as we work to complete this analysis in parallel we have continue to advance our RSV and Aven influenza h5n1 pre-clinical vacc candidates and continue to prepare both to move into the clinic at our last earnings call we shared the animal Model results on this slide on the left are data showing that our RSV nanoparticle vaccine with Matrix was more immunogenic for both A and B subgroups than a comparator RSV vaccine with aso1 e adant we believe our RSV candidate though still early in development has the potential to be first in class for both safety because of Matrix M and Effectiveness the data on the right are for our h5n1 vaccine showing that a single boost by injection was highly immunogenic in non-human primates previously primed with a seasonal influen vaccine and even a single inasal boost in red showed responses above the commonly accepted threshold for protection of 1 to 40 an effective on- does regimen for a pandemic influenza vaccine would provide a paradigm shift in public health and pandemic preparedness by providing more rapid protection and the potential to save many more lives than the current stockpiled two- Doos regimens we plan to start indd enabling studies for both vaccines as soon as next month to support the start of phase 1 clinical trials and you will hear more from us later this year about it additional areas of development for our technology now to discuss our financials for the quarter I want to hand the call to Jim thank you Bob please turn to slide 22 we're focused on improving the Financial Health and performance of Novac to enable long-term value creation today we outline more detailed plans to deliver on this Vision to begin I'll share a few of the key themes for the second quarter of 2024 and a look towards full year 2024 and beyond for the second quarter of 2024 Novac recorded total revenue of 415 million consisting primarily of 391 million from The Gap Revenue recognition for the 500 million upfront payment from sopi received fully in the second quarter the remaining 9 million from The Upfront Milestone payment will be allocated over the transition services period through 2026 we estimate full year Revenue recognition for this upfront payment to be approximately 400 million for 2024 and the remaining 100 million evenly split across 2025 and 2026 we have Incorporated this Gap Revenue recognition into our full year 2024 guidance as we continue to transform Novac into a more lean and agile organization we reduced our second quarter 2024 combined R&D and sgna by 34% compared to Prior year when excluding uh Santa Fe transaction costs for the period we saw a decrease of 43% as we look forward to the full year 2024 we are reiterating our targeted guidance for Combined R&D and sgna expenses of between 700 and 750 million as we continue to resize our organization novax is prepared to initiate an additional cost Reduction Program to further reduce combined R&D and sgna expenses a portion of which we expect to be reimbursed by santae Under the agreement for 2025 and net of reimbursement we're targeting non-gaap combined R&D and sgna of below 450 million we ended the second quarter of 2024 with cash and accounts receiv able of approximately 1.1 billion we believe the Santa Fe agreement provides for a multi-billion dollar cash flow over time during the second quarter of 2024 we received approximately 570 million in cash payments that further improved our financial position importantly we are prioritizing the completion of our apas enabling a reduction to Novac commercial operating activities and complexity as a means to further reduce our cost please turn to slide 23 for a more detailed review of our second quarter 2024 results for the second quarter of 2024 we recorded total revenue of $415 million compared to 424 million in the same period in 2023 our product sales of 20 million in the second quarter of 2024 were primarily related to the expiration of certain APA purchase rights our cost of sales for the second quarter of 2024 were 46 million as compared to 56 million for the same period in 2023 these periods include 24 million and 31 million respectively related to excess Obsolete and expired inventory losses on firm purchase commitments and unutilized Manufacturing capacity as previously noted for the second quarter of 2024 noax is combined R&D and htna of 208 million reflects a 34% reduction from the same period in 2023 excluding the 31 million in santae transaction cost our second quarter 2024 combined R&D and hdna was approximately flat to the first quarter of 2024 please turn to slide 24 the Santa agreement provides for a multi-billion dollar potential across upfronts Equity investment milestones and royalties the anticipated present value of the royalties on copi NAA flu covid combin and combination products and new vaccines with Matrix M are the are expected to be the largest individual component of value from this transaction of note this agreement reflects just one of the four pillars of value for novax and given its many layers it's worth another review to be better appreciated please turn to slide 25 the covid-19 in Santa Fe Co flu combination related terms include the potential for up to approximately 1.3 billion in one-time Milestone cash payments and Equity investment during the second quarter of 2024 the initial cash payment included 500 million upfront and approximately 70 million Equity investment in Novac stock near-term nid covid-19 Milestones of 350 million and covid flu combination Milestones of 350 million should provide important cash flow to the company we expect to complete database lock in the fourth quarter of 2024 which would enable earning the first 50 million Milestone Revenue recognition for this Milestone will be allocated over the transition services period through 2026 all other Milestones under the agreement will be recognized in the period when earned the 175 million bla Milestone is anticipated to align to our bla PFA date and approval which is presently targeted for April 2025 the two 25 million authorization transfer Milestones are expected to follow as we enable copi to commercialize no NOA ofid in the US and Europe for the 2025 2026 vaccination season the 75 million technology transfer Milestone is expected to follow completion of our transition Services obligations that we currently estimate to occur in late 2026 for the sopi flu covid program there are two Milestones totaling 350 million related to the development and first commercial sale Soni recently noted on the earn call that they expect to start clinical trial Main manufacturing activities in 2024 we are working to support copi in these efforts and await more visibility into the potential timelines in addition Novac is eligible to receive tiered royalties on net sales from co9 mono and covid combination products this enables Novak's meaningful participation in future economics from the current and future products under this agreement new vaccine developed with Matrix n by Soni create a broad opportunity to advance this technology and provide noax with multiple Revenue generation opportunities we are eligible to receive up to 210 million in Milestones plus ongoing royalties for two decades from the time of launch for each new vaccine developed utilizing novax's Matrix M adant for example if copi developed five products with our Matrix M each with a billion in sales this represents hundreds of millions in royalties per year plus over a billion in onetime Milestones novax will support copi As It prepares to advance all programs associated with this agreement and no VA would be eligible for cost reimbursement across the host of spend categories please turn to slide 26 we're committed to creating a more lean and agile organization to align the compan with the company's market opportunities to advance that goal for 2024 we are reiterating our targeted combined R&D and htna expense guidance of 700 to 750 million we are currently at the highend of the range when accounting for the sopi transaction cost and we will continue to push to find sings in our cost structure as the year progresses novax is prepared to initiate an additional cost Reduction Program to reduce combined R&D plus sgna expenses a portion of which we expect to be reimbursed by sopi Under the agreement during 2025 and 2026 for 2025 and net of expected reimbursement we expect our non-gaap combined R&D and sgna to be below 450 Million by 2026 we expect to drive down combined R&D and GNA expenses to below 350 million in addition as we assume a secondary role in commercial markets this enables the reduction of commercial and supply chain cost we are actively exploring the sale of our Czech Republic manufacturing facility which could both provide cash proceeds and reduction to our ongoing operating cost please turn to slide 27 now turning to financial guidance that we have updated to incorporate the Gap Revenue recognition for the 500 million santae upfront payment and outlook for APA and commercial sales of note we received the full upfront payment of 500 million and approximately 70 million Equity investment from sopi during the second quarter of 20124 for the full year 2024 and on a gap basis we expect to achieve total revenue of between 700 800 million this includes 400 million of Revenue recognition from the 500 Santa Fe agreement upfront payment and 25 million in royalty and other revenue from partner related activities which is recorded as licensing royalty and other Revenue we are updating our full year 2024 product sales guidance and expect to achieve between 275 million and 375 million this includes a 100 million for apas already delivered through midyear and Commercial product market sales of 175 to 275 million in the second half of 2024 importantly our expectations for the US market performance remain unchanged and we expect the majority of remaining product sales to occur in the fourth quarter of 2024 the 150 million reduction to the midpoint of our full year 2024 product sales guidance reflects 100 million from the New Zealand APA we are in ongoing discussions with New Zealand in response to their desire to cancel this agreement and 50 million from EU commercial sales as we target a smaller set of prioritized countries for the 2024 2025 vaccination season for the remaining APA agreements our intent is to amicably negotiate or deliver doses or when appropriate exit agreements with the goal of these activities to be cash flow neutral or favorable on a go forward basis to be conservative we're removing APA sales from our forward-looking Revenue expectations until further Clarity is available on each will instead emphasize realization of cost savings that come from exiting commercial markets our current operating plan including the multi-year combined R&D and sgna expense targets highlights a path to maintaining our goal of at least one to two years of cash on hand prior to receipt of cash flows from the sopi agreement in the form of milestones and royalties we look forward to sharing additional updates as we seek to improve novax's financial performance cost structure and strength to deliver shareholder value with that I'd like to turn the call back over to John for some closing remarks thank you Jim before we take your questions I'd like to thank you all for joining us today and for your ongoing support as we work to build a new vision and future growth platform for novax as you have heard we're working hard to position the company for future growth with a focus on our new value drivers including driver 1 the santae partnership which provides for a multi-billion dollar potential across upfronts Equity investment milestones and royalties over time value Driver 2 our late stage pipeline value driver 3 leveraging our proven Tech platform to drive additional Partnerships and Deals and finally driver 4 our new early stage pipeline I'd now like to turn the call over to our operator for questions and answers thank you thank you we will now begin the question and answer session to ask a question please press star one on your touchdown phone if you're using a a speaker phone please pick up the handset before pressing the keys to withdraw your question please press star and two at this time we will pause momentarily to assemble our roster once again star and one if you wish to ask a question thank you for waiting we now have our first question and this comes from the line of Roger song from jeffre please go ahead great um congrats for all the progress and then thank you for taking our question yeah thank you John so the first one is regarding the updated uh 2024 guidance understanding nothing really changed for the US uh expectation mostly driven by the EU and uh New Zealand um just curious about the uh can you give us some of the updates regarding the US Contracting um you know given this timing of the Season how confident you are you will be able to deliver this uh guidance um in the US particularly thank you good question Roger John T you want to take that one yeah sure e operator can you hear us okay is that better Roger yes sir you're L okay I so we had a bit of a technical difficulty there for a moment so um maybe let's maybe back up to address uh Rogers Roger's question um so as far as uh Retail Pharmacy Contracting execution so far has gone extraordinarily well um as you can see from uh the slide that we presented all of the top retail phes are under contract um as well as many of the buying groups for the smaller Grocers and independents we've made great progress um over last year with things like um online schedulers um and and access and stock orders that will be in in in each of those so much better progress um from last year I think that will provide an opportunity for those interested in getting the vaccine to come into the pharmacy um some of our communication programs at the consumer level and then also at the pharmacist level will open that door to availability to the product so I think all that's gone in a very positive direction um excellent thank you thank you we'll now take the next question and this comes from the line of amayan manani from the Riley Securities please go ahead your questions and congrats on many components of your portfolio showing progress today uh about your uh kick phase three study maybe uh if you could learn some uh you know protocol differences uh that you have uh integrated in your program uh you know having the advantage of going uh third hair um um so if you could maybe highlight that and then um you know why do uh you know both um the Nano the the flu vaccine and the and the combination vacine in the same study versus maybe trying to do separately um is is the other question because you know there are control arm differences and and you obviously have pretty you know strong compelling data on on strain B from from the previous nanoflu candidate so if you could maybe help clarify your strategy here would be helpful then I have a follow so M thank you for your questions Bob two questions from M the first is have we made any changes to the protocol uh based on what we've learned the fact that we're going third here and then secondly his question about one program versus two if you want to handle that one thank you sure uh thanks for that uh so uh we do have as I mentioned earlier we do have alignment with FDA on conducting a single phase three protocol to support both products and we are in we remain in dialogue with them on some of the details so I don't think we're prepared to actually discuss the specifics of the protocol design at this time but let's say to answer your second question we will leverage certain efficiencies by incorporating both products into the same study by using shared comparator control groups and um we also uh do know that the previous experience that you allude to uh with the influenza vaccine can also be leveraged to support the safety database for the product for the new product okay um got it and then just uh on the long-term uh Opex guidance that you put out there uh you know given that the there are some um uh interesting parts of your earlier stage pipeline that you look to also advance and you talk to some of that uh could you just give us a little bit of a mix of um you know R&D scna and and also when should we start to see uh you know some of these candidates get into the clinic uh from either you or or even your partner SFI uh and thanks again for taking your questions good good question Mike Jim Kelly will address the financial question exactly M you're um you're right on spot in terms of capturing the dynamic of our cost structure change why we strategically enable really the unlocking of significant value from our early stage pipeline we expect the vast majority the majority of our cost structure as we approach that 2026 below 350 million to be invested back in this value creating early stage pipeline as we continue to drive to a lean and agile organization and then Mike I believe your the second part of your question was when do we expect to see some new assets emerge in our Pipeline and what timing might that be regarding hitting the clinic so I think we're we're excited to unveil what that new pipeline is by the end of the year as you know we're also deep into a search for our new president of of research and development we've had a lot of interest in Novac especially post the sopi deal with further validation of our Matrix M and proven technology platform the fact that around the world people are recognizing what this technology is capable of and I hope everyone was able to hear some of the examples that Bob Walker shared where we've added Matrix M to other products that are established and in market right now that are significant franchises for other companies we've shown an ability to potentially improve those products and even reduce their cost of production these are significant and we believe our technology We've Only Just Begun to tap into that potential so we're very excited to unveil uh what our exploration of that technology right now might be telling us on what else we can do Beyond a seasonal vaccine Beyond even respiratory potentially we know that's where our wheelhouse is right now but this this technology has capabilities well beyond what we've explored with it so far so as we get to that unveiling we will be sharing also mying some timelines on that and we look forward to doing that in the future when we have more context importantly we're deep into the analysis and exploration of what else we could do with the tech and post copi and post the last 18 months of lifting our going concern putting Gabi be the Gabi situation behind us reducing our current liabilities significantly improving our balance sheet improving our cash position we've now put Novac in the position to focus more on what we do best which is research and development from this amazing technology platform so we're excited to share that with you in the future we're working diligently on transitioning the company away from focusing all of our energy on one product every season to now being able to focus on multiple shots on goal for potential potential future growth which we laid out as our four drivers we're in that transition now and it's a period that we ask for a little bit of patience as we wrap up our last season and we change the direction of the company toward this we're excited about what the future holds and we're excited to unveil that pipeline in the coming quarters that's helpful look forward to learning more details on that thanks again thank you once again if you wish to ask a question just press starn one on your telephone keypad and the next question Trahan from a Bank of America please go ahead uh Hey guys uh thanks for taking our questions um just a couple from me um one one followup just on the the kick program is your expectation that there could be an approved kick therapy in the US given you've shifted your phase three enrollment to Australia and New Zealand and then um just curious since the the peda for the bla will be after handing the Reign Over to sopi um whether they had any input into the filing or if any of the terms under the collaboration are are contingent upon receiving the bla thanks Alec great to hear from you thank you for your questions I think the first question we just want to make sure we understand your question correctly if I if I heard you clearly you were asking is there the chance for a US approval since the recruitment is occurring in Australia so I'll hand that over to Dr Bob Walker go ahead Bob right so uh the study is our plan is to conduct the study in the southern hemisphere Australia New Zealand as mentioned the study would be done under us indd so those data would apply to a Us application and I believe Alec your second question related to the the timing of bla and the related Milestone with Santa and the timing of handoff of commercialization just to clarify if you might clarify that are you seeking to understand timing of the potential receipt of that Milestone payment that would be associated with that yeah I guess I was asking more more in terms of um input from sopi on the bla and whether you know there's anything contingent um Milestones or otherwise on that bla thank you well obviously we're working very closely with our partner sopi and very excited about that partnership and what it could mean in the future but we have already filed that bla and that's already under review by FDA yeah just to add to that a little bit um you know there's there's ongoing and con constant interaction with santae on uh all of all of these necessary steps uh the the bla importantly one for the sake of the of the Milestone but also as we move forward um and look at each and every next season the preparation for the season having to be La in place um is an important next step for us and and so uh yeah there's a significant coordination between our organizations to make sure that we have the value of their inputs and that we're moving forward as quickly as we can makes sense thanks for the color thank you and we will now take the next question and this comes from the line of Eric Joseph from JP Morgan please go ahead hi good morning thanks for taking the questions um just on uh first on Commercial just with your Us sales guidance uh here can you just talk about sort of what that um anticipates in terms of dose volume you expect to go into Market with and and how you should think about um sort of gross margins uh for the co vac for your covid vaccine moving to um a PFS format and then secondly um for the phase three study starting um uh later this year maybe just sort of by way of backing into the design of that trial can you talk a little bit about sort of what um activity profile or yeah comparative activity profile you'd like to be in Market with or hope to be in Market with um with a standalone flu vaccine thanks there It Go we'll hand the first question over to John tro I don't believe John we're disclosing specifics of dose volumes etc for competitive reasons but you may want to take an attempt at Eric's first question yeah no I I think what's important to talk about here is uh our Readiness for the season I I you know the the guidance is one thing but our ability to accomplish what we think is aligned with that guidance has multiple factors um focus on the pharmacy one which we've talked about um which is significantly important um also what you know pricing strategy is and and uh you know we're not going to get into disclosing what our kind of discounting strategy is on on this call but all all pulled together uh to to make us well positioned availability of product uh near the end of the month and certainly at the start of the season um making sure that the contracts are in place uh that we're well positioned from you know uh uh a discounting strategy to support access it into the product I and then availability throughout the throughout the whole season so I I think that's kind of the most important takeaway thank you John and then Eric your second question if we understood you correctly you were asking about I believe what type of profile we're seeking or hoping to have out of our clinical program that could make our product uh competitive against others Bob did you want to address that sure well I'll say that uh uh for the purposes of the phase three uh the um the statistical test will be that the combination product uh performs in a non-inferior way immunologically to each of the individual components so to kick to the influenza component and kick to the covid component so that would be the uh immunologic test uh and the value of the product I think is the fact that it's a combination the design is uh enables a hierarchical uh statistical analysis that can also evaluate superiority so that's built into the design um and so we'll be able to make conclusions on both of those uh those points but um thank you Bob that was helpful on the design of the study and potential data points we could assess afterwards John any commentary on Target commercial viability here is critically important right as we look at the viability of our kick program right primary focus of the trial we also took the opportunity to look at Standalone flu right so Standalone flu continues to be an important product um and public health um vaccine profile but we also believe we've got a very strong candidate uh that could demonstrate um improved efficacy in the market um we also want to establish a seasonal influenza vaccine as a foundation for possible pandemic in the future h5n1 continues to be important um and be is in being observed around the globe so having the opportunity to have data coming out of our Standalone flu vaccine knowing what some of those other Dynamics are and knowing the profile of our flu vaccine and the significant improvements over existing flu vaccines I think position us well for future value creation thank you Bob and John and Eric one last comment there is that certainly we believe that our technology can afford the development of vaccines with a very good tolerability profile and as the market moves toward combination which our Research indicates it should uh with multiple seasonal diseases out there that people are trying to protect themselves against that having a product where you can combine multiple antigens in with a very nice tolerability profile potentially versus competitors is very important in the marketplace for consumers as they make a decision on which combination vaccine they may want so again when we get the data we'll assess the data will steer the strategy and tell us how competitive it is but we have confidence in our Tech platform that it has a good chance to really produce a nice profile that will be competitive thank you thank you and we don't have any further questions at this time oh sorry we have oh yeah no further questions at this time this concludes our Q&A session as of the moment over to your uh Speaker John Jacobs for any closing remarks please go ahead sir thank you operator appreciate it and thank you everyone to join us today we appreciate your support we appreciate your your patience as we work through the the future strategy for Novac and start to deliver opportunities for long-term growth in four different categories that we highlighted today we're excited about what the future holds as we continue to reduce our cost basis move toward a more lean operating structure and prepare for the next chapter in the company's history thank you so much for joining us everyone thank you this concludes our conference for today thank you for your attendance you may now disconnect