Vical's Allovectin: Why Hasn't The Trial Been Stopped?

Mar.12.12 | About: Vical Incorporated (VICL)

Last week, Johnson & Johnson (NYSE:JNJ) reported that an independent committee monitoring the Phase 3 trial of its drug Zytiga for prostate cancer stated "… it would be unethical to continue; it effectively ended the trial early so that the patients getting the placebo could be offered Zytiga instead." (see here)

In fact, the drug had demonstrated that patients in the trial lived longer on average, but - and this is important (and also was missed by many in the press) - the results fell short of being statistically significant when it came to the "gold standard" in the treatment of cancer: Overall survival, or OS.

The mixed results of Zytiga notwithstanding, I have been receiving inquiries as to why, after the many reviews by safety boards of Vical's (NASDAQ:VICL) Phase 3 trial of Allovectin, its treatment for metastatic melanoma, there has been no recommendation to stop this trial and allow patients in the placebo cohort to cross over to the treatment. To understand why this has not occurred requires an understanding both of the history behind the Phase 2 Allovectin trial as well as the design of the ongoing Phase 3 trial.

The results from the Phase 2 trial of Allovectin, which I covered earlier this year, were encouraging. Vical's scientists used these data to design the Phase 3 trial in such a way as to optimize the results of the Phase 3 trial and highlight the advantages of immunotherapy.

Specifically, the Phase 3 trial is powered to show statistical significance at the expected response rates and at the expected survival rates for both the treatment and control arms. But, as can be inferred from available information, it is not highly overpowered to show these results. Accordingly, there are no interim efficacy analyses built into the trial design. Efficacy can only be analyzed after completion of the trial, which will not be unblinded until both the response rate and survival data have matured.

The safety board monitoring the Allovectin Phase 3 trial has had access only to safety data, not efficacy data. They have completed five interim safety analyses with no issues. Importantly, they have determined no additional safety reviews are required until the trial has been completed. Put another way, the board did not have the ability to halt the trial except for serious safety issues.

Finally, crossovers are not allowed in this trial. The protocol requires that patients coming off either arm in the Phase 3 trial can move on to other approved therapies (or other clinical trials, if they allow prior systemic therapy). Patients coming off the chemotherapy control arm in the trial cannot cross over to receive Allovectin.

Based on the latest guidance provided by the corporation, it expects to reach the target number of death events in late 2012, and expects to unblind the data for both response rate and survival at that time.

Technical Analysis

As seen in the daily chart below (courtesy StockCharts.com), the stock has rebounded in the last few days, and currently is tracing around $3.25. Relative strength has risen as well, though the MACD indicator is neutral. Still, the stock is trading in a down-trending channel.

On a weekly basis, relative strength continues to weaken while the stock touched the 200-week moving average before rebounding. Any breach of this support level could see the issue dropping to the $2.50 - $2.75 range. The weekly MACD indicator remains negative.

Disclosure: I am long VICL.

Additional disclosure: I am long VICL and will not alter my position within 72 hours of the time of publication of this article. Material presented here is for informational purposes only. Consult your financial adviser before making investment decisions. Investing includes risks, including loss of principal.