Vical's Herpes Vaccine: An Update

| About: Vical Incorporated (VICL)

With the failure of its Allovectin immunotherapy for multiple melanoma and the refocus of the company's resources on vaccines, Vical (NASDAQ:VICL) finally provided some long-awaited information on the forthcoming Phase 1/2 trial of the company's herpes simplex virus type 2 or HSV-2 vaccine. As the company discussed at yesterday's Baird 2013 Health Care Conference in New York, the first human trial of its HSV-2 vaccine will commence in the United States toward the end of this year, and will enlist approximately 150 HSV-2 positive adults with a history of symptomatic genital herpes lesions.

For readers who are not familiar with the disease, the figure below, courtesy Vical, presents an overview of the herpes simplex virus type 2.

I presented detailed overviews regarding this vaccine's development in August 2011, February 2012 and February 2013. Of the two serotypes identified, HSV-1 and HSV-2, the former is more common in the United States, but the latter is considered more serious. HSV-2 is a sexually transmitted virus which is the leading cause of genital herpes. According to Medscape, approximately 65% of the United States population is seropositive for HSV-1 by the fourth decade of life. As well, approximately 25% of the United States population is seropositive for HSV-2 by the fourth decade of life, with women being infected more frequently than men. The indirect and direct costs of incident HSV genital infection in the United States are presently approximately $1.8 billion and expected to be greater than $2.7 billion by the year 2015.

Currently, there is no cure for genital herpes. It is a recurrent, lifelong viral infection. But under a grant from the National Institute of Allergy and Infectious Diseases Division of the National Institutes of Health (NIH), the effort mounted by Vical is directed at developing a plasmid DNA-based vaccine to inhibit recurring lesions in patients latently infected with HSV-2. The vaccine also is intended to reduce viral shedding to help prevent transmission to others. And while still in the preclinical stage, results have shown a reproducible statistically significant reduction in viral lesion occurrence in guinea pigs latently infected with HSV-2.

Vical's HSV-2 DNA vaccine program, as seen below, involves collaboration with Lawrence Corey's group at the Fred Hutchinson Research Center. As well, the company is working with researchers at the University of Washington. Several proof-of-concept efforts have demonstrated the efficacy of the approach to be used.

As to the trial design, the 150 adults enlisted in the study first will undergo 2 months of observation to collect shedding data. This will be followed by three monthly injections of the vaccine. A 2-month observation period will close out the trial regimen. The company expects the trial to enlist quickly, given the overwhelming interest in the program.

(click to enlarge

Current estimates suggest that a therapeutic HSV-2 vaccine could generate as much as a billion dollars in annual sales at its peak.

Technical Analysis

As seen in the Daily chart below (courtesy, Vical's presentation has spurred interest on the Street. The shares have broken the issue's downtrend (which in large part was caused by a major investor liquidating portions of his position) and have apparently begun a technical recovery. The shares remain oversold, though the MACD is positive.

The weekly data also show an oversold stock, with a negative MACD.

Disclosure: I am long VICL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long VICL. I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. It is up to investors to make the correct decision after necessary research. Investing includes risks, including loss of principal.