Q2 2021 Dynavax Technologies Corp Earnings Call

Good day, ladies and gentlemen, and welcome to the side effects technologies second quarter, 2 and if any 1 conference call.

During this conference call is being recorded.

At the end of the company's prepared remarks, we will open the call for questions and provide specific instructions at that point.

I would now like to turn the call over to Nicole Arndt Senior manager Investor Relations you may begin.

Thank you and good afternoon and welcome to the Diamondback.

Second quarter, 'twenty, 'twenty, 1 and financial results and corporate update conference call. Joining me on the call today are Ryan Spencer Chief Executive Officer, Kelly Macdonald, Chief Financial Officer, Robert and Chief Medical Officer, and John <unk> Senior Vice President commercial before I begin.

And I'll be making forward looking statements day.

Including statements regarding revenue expectations and financial outlook isn't performance expected revenue and margin Hustle Sotheby's commercial profile.

Potential to become the standard of care European launch tiny post marketing studies and other vaccine development with our collaborators.

Are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risks are summarized in today's press release and are detailed in our risk factors section of our current 10-Q and 10-K periodic reports filed with SEC, which we encourage you to review and I will now from the call over to <unk>.

Ryan Spencer CEO and Diamondback.

Thank you Nicole and thank you all for joining us today I'm excited to share results from the second quarter, which reflect continued successful execution and reinforced our belief in 2020, 1 as a transformational year for buybacks and we.

We continued to execute on our core priorities driving growth apples to Abbvie and England, our CPG and 18 adds new partnerships and the fight against COVID-19.

And our pipeline and strengthening our financial profile and I will touch on each of these briefly and then turn it over to the team to provide a bit more detail.

First we generated $13.7 million and help us that the product revenue, which is our highest quarterly revenue per episode and B since launch.

In addition to revenue growth, we continued to grow field targeting and market share achieving 30% share and we finalized an agreement with the very nordics for the commercialization of Hep with Abbvie and journey.

We continue to believe <unk> b has the potential to be the standard of care.

Don't hepatitis vaccine and the United States.

And we are very excited to welcome and additional 35 members to our sales team that will help us make this goal a reality.

This investment and the growth of purpose that'd be highlights our confidence and the product and the value of the commercial opportunity.

Secondly, our vaccine adjuvant CPG and 18 provides a variety of opportunities for diabetes.

The vaccine developer or as a supplier of adjuvant to commercial supply agreements.

We continue to make tremendous progress with the execution of multiple supply agreement to provide CPG and 18, 2 partners developing COVID-19 vaccines.

Additionally, we continue to progress our internal efforts to leverage the proven capabilities of CPG sales team to develop innovative new vaccines.

We are currently enrolling patients and our phase 1 trial for our next product candidate with the T that vaccine adjuvant and with TPG and 18 focused on improving the response the protests as components of the combination vaccine.

Lastly, and importantly, we are pleased to report that we generated positive GAAP net income for the second quarter and our ROE.

Our financial performance during the first half of 2020..1 reflects the benefit of continued growth of <unk> revenue and the disciplined approach and strategy, we implemented to respond to the COVID-19 pandemic.

As I've said before we believe this and a transformational time and divestments history and we.

And we'll set the foundation for continued growth into the future. We are focused on identifying the best ways to deliver value to our shareholders by leveraging our development and commercialization strength and vaccines I am proud of the progress we've made so far.

Take you through the update and help us be I will now turn the call over to Don to saw senior Vice President of commercial.

Thank you Ryan.

<unk> continues to make significant progress on its path to becoming the standard of care for hepatitis B prevention, and the United States with a potential market of over $600 million.

With additional opportunities for expansion beyond that.

Herbalist that'd be the only 2 dose 1 month hepatitis b vaccine that delivers higher rates of protection across all patient types and a shorter period of time.

Hepatitis B vaccine series completion is essential to achieve protection.

Unfortunately, 3 dose hepatitis b vaccine regimen and have proven to be challenging with low completion rates.

Fortunately based on real World data twice as many adults complete the Hep Lasalle P series and those starting on and Gerrick speak.

As Ryan mentioned second quarter net product revenue per hapless abbvie was $13.7 million.

Our highest quarterly revenue since our commercial launch.

This revenue milestone was achieved despite the hepatitis C market remaining far below historical norms due to the ongoing pandemic with vaccine utilization during the quarter and approximately 61% of pre pandemic levels consistent with prior quarter utilization at 59%.

Market share and field targeted accounts increased to 30% and the quarter and increase of 9.5% from the second quarter of last year.

We are very excited by this outcome and remain confident and our ability to continue to drive market share quarter over quarter and field targeted accounts.

And the retail segment there were several large purchases from national customers, plus significant increases and a number of new stores ordering Hep Lasalle b.

The retail segment has started to shift its focus from COVID-19 vaccination back to routine adult vaccines, such as hepatitis B.

We believe this shift has provided a great opportunity to accelerate adoption of Hep B and a second half of this year.

Additional progress in the quarter included increases and D. O D purchases as largest session basis prepared for the surge of new recruits over the summer months.

We continue to make progress with the remaining non converted the session basis and remain on track to convert at least 1 additional base by year end.

Looking ahead with a high hopes that we can quickly overcome the concerning resurgence of COVID-19 cases due to the Delta variant, we expect the hepatitis b market to continue its steady recovery back to pre pandemic levels.

This ongoing recovery coupled with increased awareness around the importance of vaccine provides a terrific opportunity to capitalize on our strong clinical profile of <unk> fabby.

Additionally, we anticipate the CDC Advisory committee on immunization practices or ACI P will vote on a universal hepatitis B recommendation for all previously unvaccinated adults in October.

We believe a positive decision will be an important driver of long term value for Hep a fab beat.

Based on the increased awareness around the importance of vaccine.

Continued recovery of the hepatitis b market and market expansion opportunities, including a potential ACI P. Universal hepatitis B recommendation.

We made the decision to expand our commercial footprint.

In July we hired additional 35 sales professionals, which increased our sales team to approximately 100 field based professionals and expect deployment of these resources to drive increased awareness of our clinical benefits of helpless that'd be and market share.

And additional highlight for Hep with Abbvie was finalizing a commercialization agreement with Varian Nordic from the marketing and distribution of helpless upbeat and Germany.

We look forward to Bavarian Nordic and launch of hapless that'd be in Germany, and the first half of 2022 and updating you on progress in Europe.

And we continue to see a steady return and vaccine utilization increasing market share and field targeted accounts progress and national accounts and potential for significant market expansion and a planned launch in Europe. We.

We are very excited about both the near and long term prospects per hapless abbvie.

I will now return the call back over to Ryan to walk through the progress we've made in our CPG 10, 18 adjuvant business.

Thanks Dawn.

As you can see from Don's update telesat and <unk> provide an important foundation for our company.

And before I turn it over to Kelly to review our financial results, Let me provide and update on our progress and leveraging the value of our adjuvant.

As a reminder, CPG and 18 is the adjuvant use and hepa therapy, where it has demonstrated the ability to generate higher levels of protection with fewer doses, while maintaining a comparable tolerability profile as compared to and alum adjuvant at hepatitis B that we.

We are focused on leveraging this profile to effectively stimulate the immune response, while maintaining relatively low reactor munis and need to develop new innovative that theme.

Our most advanced efforts are aimed at COVID-19, vaccines, where we are providing CPG and 18 to multiple collaborators to support the development of COVID-19 vaccine across different vaccine platforms. Our collaborators have made tremendous progress during the year, both with the advancement of our clinical programs and Dr. T purchase.

Concepts.

And our collaborators are currently secured potential demand for over 800 million doses and adjuvant and vaccines from government and non government organizations through 2022 with additional capacity for their vaccine still available.

During the pandemic, we have successfully scaled up and expanded production capabilities to increase our capacity to support the demand for CPG and 18 from our collaborators.

Now our revenue in future periods from COVID-19 is dependent on the continued successful development of our collaborators programs. So I will briefly review the current status of each program and the unique aspects of their clinical trials.

First global biopharmaceutical set out full enrollment of their phase III placebo controlled efficacy study.

This study is evaluating the efficacy of their CPG adjuvant did protein sub unit vaccine and over 29000 patients across 4 continents.

It is important to note that this efficacy trial is being conducted in the presence of multiple barriers and concern and we will provide a current real world view of protection against labs, and from Covid, 19, and any severity along with including protection against severe disease.

We'll leave the vaccine efficacy data is expected this quarter and will include sequencing data to identify the various responsible for infection.

And if positive these data could be used as a basis for submission of applications for emergency use to regulatory authorities and China, Europe and WH showed thereafter.

And has executed a supply agreement with Gabby and the vaccine alliance to supply 64 million doses of vaccine in 2021 with an option for an additional 350 million doses in 2022 through the that collapsed and fulfill.

Another collaborator while NEVA is evaluating inactivated whole virus vaccine adjuvant and in CPG and <unk> and our head to head Immunogenicity study against the Astrazeneca vaccine and over 4000 patients and the U K the <unk>.

Mary endpoint and this study is superiority compared to the E. <unk> seen data from this trial is intended to support and application for emergency use and the fall of this year and.

Additionally, while needless participating and a booster study and the U K, which will provide important data on the ability to mix and match vaccine platforms.

And this development program is being supported by their supply agreement with the U K government for up to 100 million doses of vaccines.

Moving to our next collaborator biological E is currently enrolling its phase 2.3 trial and India for their receptor binding domain vaccine adjuvant and the CPG and 18 this trials and Immunogenicity study in approximately 300 patients.

<unk> has entered into a contract with EDI and government to supply 300 million doses of vaccine.

Under this arrangement the and government has provided funding for the production and vaccine in advance of clinical data so that inventories available upon emergency use authorization.

And finally I'm happy to report that medicines that vaccine Biologic Corp has recently received emergency use authorization in Taiwan for their protein sub unit vaccine adjuvant and adjuvant CPG to 18.

This EUA was granted based on the safety and Immunogenicity results in a phase II trial and approximately 3800 patients.

And this study the vaccine demonstrated a very high solar conversion rate of 99, 8%. Additionally, the Taiwan FDA supported the EUA by conducting a favorable comparison to clinical results for the easy vaccine from a panel of 200 patients that were not included in the message and trial.

Although margin is 1 of our smaller collaborators. This EUA marks an important success and our efforts to support the development of multiple COVID-19 vaccine.

Through a combination of advanced funding under our collaborators government contracts and our funding agreement with the coalition for epidemic preparedness or seppi, we and been able to support our maximum production capacity in 2021, the delivery schedules and our supply contract with our collaborators equates to approximately 300.

The $400 million and opportunity for revenue associated with TPG and 18 shipments in 2021. This revenue opportunity is contingent on many variables, including continued success at each of our partnered programs and timing of delivery, which ultimately drives the amount and timing of revenue recognition under <unk>.

These contracts.

We are extremely proud to be part of the global response to the pandemic and are looking forward to the upcoming clinical trial results across our diversified partnership portfolio.

Beyond COVID-19, we continue to progress our CPG and 18, adjuvant and T that vaccine, which is being developed in collaboration with Chairman Institute of India, We expect to have safety and Immunogenicity data in adults and adolescence from our ongoing phase 1 study and the early part of next year.

Additionally, we are planning baboon and human challenge studies to assess the impact of vaccination on disease symptoms and naval colonization of the pertussis bacteria. We believe the data package may serve as a proof of concept for a vaccine that will provide longer lasting immunity and will reduce the ability for that.

C vaccinated people to continue to spread the disease.

This is an exciting opportunity for us to leverage our CPG and 18 adjuvant to brain and improved vaccine to the market.

I'll now turn the call over to Kelly to discuss our strong financial results and more detail.

Thank you Ryan.

Financial results are included in the press release, we just issued this afternoon.

Ryan mentioned second quarter was 1 of our strongest quarters to day, and that's especially true as it relates to our financials.

We recorded total revenues of $52.8 million, which includes net product revenue of $13.7 million and help them be as well and $39 million from CPG Penni can adjuvant sales.

To our COVID-19 vaccine collaboration partners.

We also recorded GAAP net income of $4.5 million, marking our second profitable quarter, and a wrong and we exited the quarter with approximately $346 million of cash cash equivalents marketable securities on hand, and have taken steps to strengthen our capital structure with the successful debt restructuring and.

Starting with helpless and beef financial performance.

We recorded our highest quarterly net sales of $37 million, representing significant growth from net sales of $2.4 million reported in second quarter of last year.

And year over year growth is primarily driven by increased demand and increased utilization.

And as Don mentioned, we're very excited to see continued growth and scale targeted market share to 30% and believe this is 1 of our most important lead indicators and utilization continues to progress towards pre pandemic levels.

Moving onto CPG <unk> adjuvant revenue, we recorded $39 million and product revenue associated with our sales to our COVID-19 collaboration partners and the second quarter.

As previously mentioned, we continue to make significant progress with each of our CPG and eating partnerships and to date, we have executed for commercial supply agreements, including most recently Clover biopharmaceutical and June and biological Ian July.

As Ryan highlighted scheduled shipments under these commercial supply agreements represent approximately $300 million to $400 million and aggregate TPG 10, 18 product revenue opportunity in 2020, 1 with about half of those shipments currently scheduled in the fourth quarter.

These shipments and a corresponding revenue remain contingent on each of our partners continued clinical continued success and timing of product delivery. Both of these factors ultimately drive the amount and timing of revenue recognized under these contracts.

Further and we begin selling to our partner supporting low and middle income countries. We will expect the corresponding gross margins to settle in at <unk> 50 per cent range.

And a reminder, gross margins associated with TPG and 18th sale are dependent on a number of factors including customer mix.

Turning to our balance sheet as of June 30th 2021 we carried approximately $346 million and cash cash equivalents and marketable securities on hand. Additionally, as of June 30, 'twenty 'twenty..1 we had current deferred revenue of approximately $130 million, which primarily consisted of contractually.

Amounts from our CPG and 18 collaboration partners recorded prior to the shooting up material.

As of June 30th 'twenty 'twenty..1 we also had long term deferred revenue of approximately $107 million associated with the cash that we've received from SEBI and a reminder, this that'd be fully forgivable loan enables the manufacturer and CPG 10, 18% P grantee, including Clover and Miami.

Moving on to our debt and an effort to strengthen our capital structure and lower our interest expense over the next few years, we restructured our debt. This past may I issuing $225 odd million dollars and 2.5% convertible notes due in 2026 with.

With these proceeds we retired our 9.5% term loan in its entirety, along with all associated covenants.

We are aware of the potential dilutive effect with a convertible instrument and used a portion of the proceeds from the issuance to invest and capped call and increasing the effective conversion price.

We believe that based on our current cash projections, we will have the option to and it is our intent to settle the par value of these notes and cash.

Our new debt structure and lowers our interest expense by approximately $12 million on an annualized basis over the next few years and allows us to match our debt maturities with the growth of our business overtime and better enables investment behind our core business, while still maintaining strategic and operational flexibility.

In summary, we continue to make significant progress with both Hep with Abbvie and our CPG and <unk> added new partnerships and we're looking forward and multiple important milestones and anticipated catalysts in 2021, including a potential ACI key decision on universal and recommendation for adult hepatitis B vaccination as well as <unk>.

The post COVID-19 vaccine data Readouts from our CPG 10.18 collaborators.

Our success and the second quarter further validating the corporate strategy for our 2 valuable assets and we look forward to updating you on our progress throughout the rest of the year. We thank all of our investors and our team members share commitment to Diana.

Operator, we would now like to open the Q&A portion of today's call.

Thank you for everyone to ask a question you will need to press star and the number 1 on your telephone and that's.

1 on those topics zone.

We have our first question from the line of Phil Nadeau from Cowen and company. Your line is now open.

Good afternoon, and thanks for taking our questions and congrats on the progress.

First question is on the 3 to 4 and a million dollar revenue opportunity that you started for this year.

And it isn't that a lot of those back and loaded.

What is your disclosure strategy for indicating to investors and when you have visibility on and those revenue do you think there'll be discrete points over the next quarter, where you can say.

Certain trucks and net revenue and our guaranteed for this year or.

Is it so back and notice the weight and the year, we won't really know where you can recognize until 2 or 3 years over.

Thanks, Phil.

So the question really is is a focus on the progress of our Quad Raiders.

Obviously as a supplier of a component of the vaccine clinical success their ability to continue to manufacture and deliver on their commitments as well as eventual regulatory approval is all very critical to having the right level of insights.

To be able to project that revenue and more specifically.

And so our plans on communication are based on.

Increasing certainty and across those variables.

So we really need to see the data and and.

Move forward on the path to EUA before it can be more specific.

Got it that makes a license.

Second question from the expression that sales force with a 35 members being added.

What are the priorities for those members who are going to increase the number of targeted accounts or.

Hope to drive even greater increases and share at the current targeted accounts and how are you. How do you expect to deploy the almost 50% increase from the seismic sales force.

Ron you want to handle that 1.

Sure Phil Thanks for the question.

Yeah, basically as we think about the footprint basically.

Essentially currently the sales force engaging at the top of the institution opening up the channel. So it's predominantly the additional 35 sales professionals and they're gonna be targeting the clinics associated clinics for pull through and.

So we believe there is opportunity there, especially as we continue to drive market share.

<unk> is right to deploy additional resources on pull through at the clinic level now that the channel is open and many of these large institutions.

Got it okay that makes a lot of sense.

And then last question.

Also on an apples and it sounds like Youre seeing a gradual recovery and adult.

Vaccine market.

Physician up like 200 basis points Q2 versus Q1, I'm curious to get your thoughts on the future trends there and now that COVID-19 vaccination seem to have slowed down do you expect a more rapid return to normal and the adult vaccination market and the second half of the year or.

And there's just too hard to say because the doctor very it makes them.

And it makes dynamics tricky.

It is difficult to say, Phil I mean, especially over the last several weeks with a delta variant.

That's come on and so quickly and so rapidly.

I can speak from a customer perspective, and our ability to engage customers has not changed.

Over the last several weeks.

So we remain confident and a steady recovery of the marketplace, but I think like everyone else, we'll continue to monitor what's happening.

Daily essentially as it relates to what's happening on the adult the variant, but again our ability to engage customers.

<unk> continues to be very strong.

Perfect. Thanks for taking my questions.

And so.

Thank you. Our next question comes from the line of Matt Phipps from William from William Blair. Your line is now open.

Good afternoon, and let me ask from my congrats as well and from most continued execution here John maybe following up on sales last question can you give them and make kind of a breakdown for the.

The utilization and the HBV market as far as you know iOS and things like travel vaccines will be done more than obviously like dialysis, but you know where does like employee.

Health fall into kind of the utilization can you give us any kind of more granular detailed across somebody's different.

Channels.

Yeah, So the idea and segment.

And is consistent with the overall and the very similar and a sense of.

And where the utilization is over all from a market standpoint.

Public health is a little bit worse than what we reported overall and the marketplace.

But then Conversely D O D. There really no impact whatsoever on utilization as the new recruit.

Bases is about the same as it was back in 2019.

And then and dialysis ucs and minor decline and utilization, but again relative to the hospital and idea and segment much much less so it does vary by segment.

But really public helping probably day segment that is most.

Impacted by the pandemic right now.

Great. Thanks, Scott.

Similar and past years, maybe last year was an oddity, but D. O D. Strong purchases were usually in Q2 and Q3 do you expect that to be the case here or was the D. O D purchase large enough this quarter that it might cover.

And their full summer kind of recruiting.

Like in years past, we do anticipate continued.

Purchasing throughout the quarter and Q3 looking ahead.

Certainly we saw.

Purchases throughout the second quarter and preparation for the summer surge.

And as we mentioned in previous calls our Q2 and Q3 tend to be the quarters that you see the most utilization based upon troop count that occur throughout the day 4 quarter period.

So we expect the same thing again this year and.

And we will see continued purchased from Q3 looking ahead.

Great and then 1 last question it looks like still a little bit of a dialysis activity and the quarter based on the slides are really small but can you comment on if that was actually I think the first bolus purchase and it was all 1.1 provider and with that kind of said it was more for stuff, but and then.

And he comments on what looks like a little bit of additional dialysis segment purchase from the quarter.

So what you see there and the on the slide we do see from time to time.

Based on class of trade. So there is some purchasing happening throughout the country with various smaller outlets dialysis clinics through I'll say it throughout the marketplace and that's really what those those doses represent that you see there on the slide.

And there's just some purchasing happening by very small clinics.

Pattern throughout the market.

Got it great. Thanks, Dan appreciate it.

Yep.

And again as a reminder to ask a question you may need to press star and the number 1 on your telephone keypad Thats Star 1 on your telephone.

You have our next question from the line of Josh and Schindler from Evercore. Your line is now open.

Great. Thanks for taking the questions and congrats on a strong quarter and just wanted to follow up.

On the topic of hapless hubs outlook and the prepared remarks.

And as exceptionally confident and the outlook for the franchise and ability to deliver results even in the coming quarters.

And recovers, but in answer to some of the Q&A and it sounds like maybe.

And you wavered, a little bit on that confidence depending on what what might happen with the pandemic strength. So maybe you can kind of reconcile.

And it felt like slightly different tones.

And that commentary and then secondly, if you could give us any color on the gross margins for in the quarter for <unk> versus <unk>.

CPG and 18 adjuvant sales that'd be very helpful. Thanks.

Okay, and while I think that's 1 question and then I'll, let Kelly talk about margins.

And what you're hearing is that we're very excited about continued revenue growth our ability to continue to generate increased market share and our ability to engage with customers, including advancing our capabilities by hiring additional head count I think the other part of the commentary is that those are the.

Things, we can control what we can't control is Martin and utilization, especially in the presence of and emerging dynamic environment for COVID-19. So I think that's what we're trying to find that balance. Although we do believe we will continue to see progress forward on utilization and things like a <unk>.

Resurgence and events and a very over very discrete period of time like we saw with Delta can always come up while we're dealing with the pandemic. So it's just really balancing those factors.

But we're very very confident about our ability to continue to drive revenue.

Kelly you want to handle the margin question.

Sure.

And with Q1 gross margins for the quarter came in and around 67 per cent.

And with that.

Okay great.

And then you also sounded quite confident and the outlook for the CIP.

Working group to discuss Universal recommendations has anything changed to further increase your confidence and and the outcome of that meeting.

The.

The October timeframe it was sort of standard early on bye bye.

The hepatitis C work group.

As far as and when they were going to be on the agenda for the vote I think the 1 piece of information. We should share is that we had expected and meeting to happen in June which is part of the 2 step process.

Prior to the vote, they like to present the evidence to grade.

And recommendation evidenced a recommendation.

And review and that didn't happen in June.

And at meeting has been rescheduled and there is now and ACI P meeting, although the agenda is not public the federal Register showed that the E. CIP meeting will happen on September 29th and 30th. So this does provide some added confidence that they are on track for and October vote.

Although.

Other than the dialogue that happened in February which was very positive. We don't have any other specific insight into the outcome of that vote.

Okay got it thanks very much.

Thank you. Our next question comes from the line of advice from H C. Wainwright. Your line is now open.

Good evening, Thanks for taking my questions and congratulations on a great quarter.

Just a question on.

The ACI team meeting and what it means so if we do have a positive both are.

Are we looking for and immediate impact and the early part of 2021 or how our 'twenty 'twenty 2 or how are you thinking about how this plays out.

And a demand basis.

Going forward.

Don.

And thanks for the question.

The way, we think about it you know certainly something like this it's going to take a little bit of time.

As it relates to getting accepted into the marketplace part of our investment.

The additional 35 and <unk>.

Build out the foundation to continue to increase awareness around they have full SAB and the disease around hepatitis B.

And when we think about it from just kind of a bigger picture.

Just some of our preliminary estimates around the market itself and the impact it will happen from ACI P. We we believe that the market will expand anywhere from 50% to 100% over the next 5 to 10 years, and that's kind of a preliminary estimate.

Our work needs to be done on that but as I mentioned before and it's going to take time for the recommendation to take effect.

As it has with other recommendations for other vaccines. It does take time for these types of things to impact the market.

Okay. Thanks, and maybe just a question on R&D and SG&A I know you don't typically don't give guidance, but you did make this.

And these 35, new members to the sales team.

And I'm just wondering how we should be thinking about.

R&D expense and perhaps more importantly SG&A.

Moving forward for the rest of the year.

Kelly.

Yeah. Thanks for the question and so if you look at our quarter over quarter trend.

Frankly speaking from an R&D perspective, you can see and it's all in the general theme seem ballpark.

And with fluctuations associated closely which is timing and timing of expenses in connection with certain of our phase 1 investments.

Lever and Alaska, Q2 quarter, $7.8 million and Q1 and.

$2 million and Q2, and we believe that this roughly and represents.

And the ballpark and trend that we can and we will protect the rest of the year.

From a SG&A perspective right.

We anticipate that the 35 head count 1 would cost us on an annualized basis between $7 million to $9 million per year.

Great. Thank you.

Welcome.

Thank you and next question comes from the line of Matt Phipps from William Blair. Your line is now open.

Hi, guys going to come back for 1 more.

And here I had mentioned on their recent earnings call that they've been having discussions directly with governments on stockpiling their pandemic adjuvant.

And I don't know if it can differ from some of these vaccines or any future Pandemics and just wondering if you guys have had these discussions obviously you have the collaboration with Mississippi, but.

And if you've gone as far as talking with any specific governments.

Not as of yet Matt I think 1 of the things that's different about just to be clear about gsk's pandemic adjuvant is.

And that that adjuvant has been approved for pandemic flu vaccines historically and so it's it has a a.

Endemic vaccine approval that they will likely deleveraging is as it relates to potential supply is something they've done before and the past I guess is my point is done and new line of business for that adjuvant.

Our ability to have similar levels of conversations will likely.

Evolve as we receive approvals for.

Turning teen adjuvant and pandemic.

Vaccines.

And then obviously that has to correspond to.

The government's desire and plans for how they day planned preparedness and the future. So.

On the list, but we need to get through the pandemic approvals first.

Got it and makes sense. Thanks Ryan.

Sure.

Okay.

Thank you we have no further questions at this time I would now like to turn the call over to Ryan Spencer CEO for closing remarks.

Thank you operator, as we look ahead to the second half of 'twenty, 1 and we continue to execute on our goal to build out and back into a leading vaccine company. We believe the evolving COVID-19 pandemic requires additional vaccines to support the global demand, our CPG to and 18 adjuvant and through our global collaborations is well positioned to be a part of this solution.

CPG to and 18 has already driven the largest quarterly revenue and the company's history and we believe it has further potential to drive significant growth and value for <unk> and its shareholders.

Now while supporting the fight against Covid is currently a key priority. We also continue to drive our business forward to the growth of sales and purple therapy, which we believe is a source of continued long term value creation as we grow revenue along the path to being the market, leading adult hepatitis b vaccine, our belief and the long term opportunity help will that be.

To be reinforced with the market traction, we are seeing and resulting record product revenue this quarter with the combined strength of opportunities from helpless upbeat and CPG and 18, we believe 2021 will be a transformational year for diamondback. Thank you for joining us on the call today, operator, you may and the call.

Ladies and gentlemen, and thank you for sure and we have today. This concludes today's conference call you may now disconnect.

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And.

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