Vical: All Systems Are Go

| About: Vical Incorporated (VICL)

Early this morning, Vical, Inc. (NASDAQ:VICL) reported its 3Q11 financial results and progress in key development programs (here). While the data and backstory will be flushed out at today’s noon conference call, the published information leaves no doubt that "all systems are go."

Revenues of $26.6 million, of course, were good to see, though they resulted largely from the recognition of $25.1 million in license revenues for Transvax , the company’s therapeutic vaccine for use in transplant applications to control CMS (cytomegalovirus). This payment was the result of an agreement struck during 3Q11 between Vical and Astellas Pharma, Inc., and it will continue to produce revenue for Vical on top of the $25 million upfront payment already received, up to $130 million and double-digit royalties on net sales of the product. More importantly, perhaps, is the fact, that the payments fatten the company’s cash and investments, which given its prudent management of operating expenses ($10.2 million for 3Q11, just above the $9.1 million for the same period a year earlier), will allow it to finish the year with $53 to $56 million in the bank.

On the product development side, the company again noted that the encouraging animal data that it had presented at a national Cancer Institute immunology conference. Here, a combination of Vical’s Allovectin with an anti-CTLA4 (Cytotoxic T-Lymphocyte Antigen 4) antibody reduced tumor growth and showed a positive trend in survival. Of course, when it comes to Allovectin, what everyone is focused on is the company’s Phase 3 registration trial in patients with metastatic melanoma, for which enrollment was completed in February 2010. Under the approved protocol, the last patients will be treated in February 2010, and top-line data for both endpoints expected to be released 2Q12. We most recently discussed Allovectin in our Seeking Alpha piece on September 30, 2011.

On another front, the herpes simplex type 2 (HSV-2) program continues apace, with a presentation by the company showing that its Vaxfectin-formulated plasmid DNA vaccines protected guinea pigs against both primary and recurrent HSV-2 disease. These exciting results expanded upon the previous studies in mice, and showed that the vaccines not only reduced genital lesion recurrence and viral shedding, but also latent infection in the central nervous system. While still pre-clinical, my personal opinion is that this program is still flying well under Wall Street’s radar. It may be one of the more important biotechnology programs to come forth in the years ahead, given the worldwide population suffering from this disease.

Finally, the company noted that Anges, its partner in the development of Collategene, for the treatment of critical limb ischemia, expects to initiate a pivotal, multinational Phase 3 trial in 2010.

On the technical front, and as this is written, VICL is up in pre-market trading on the release of the 3Q11 results. The stock broke through the 50-day moving average last week (at $3.00) and is again marginable. That level, if it holds, now becomes support. The 200-day moving average, at $3.25, however, represents resistance. As such, until the general tone of the market improves, the stock could be trapped between these two moving averages. The Daily MACD line (lower of the three graphs) is positive, indicating money is flowing into the issue.

Chart courtesy

Finally, on a weekly basis (not shown), the stock is sitting just above the weekly 50- and 200-week moving averages, with the MACD giving evidence of turning positive.

Disclosure:: I am long VICL and will not alter my position within 72 hours of the time of publication of this article.