Vical: Making Progress In The Area Of HSV-2 Vaccines

| About: Vical Incorporated (VICL)
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Earlier this year I discussed Vical (VICL), one of those biotechnology companies that appear to be flying under almost everyone's radar. The corporation, based in San Diego, CA, has, for a young biotech company, a deep pipeline as well as two products on the market, one to protect farm-raised salmon and another to increase the survival time of dogs with oral melanoma. But what really excites me about Vical, in addition to its work on cancer immunotherapies and, specifically, its Phase III study of Allovectin®, is the company’s seminal research and development in the area of the herpes simplex virus and the development of the corporation’s herpes simplex virus type 2 or HSV-2 vaccine.

Of the two serotypes identified, HSV-1 and HSV-2, the latter is most common in the United States. HSV-2 is a sexually transmitted virus which is the leading cause of genital herpes. Approximately one out of every six individuals in the United States and an estimated one out of every four worldwide is infected by HSV-2 before age 50. Even more disconcerting, perhaps, as noted by Vical at the recent BIO International Convention,

“[I]n the United States, at least 40 million people are infected with HSV-2, and approximately 1.6 million people are newly infected each year, with approximately 500,000 of those suffering from disease symptoms. Even higher infection rates are evident in developing countries, with further complications in people also infected with HIV.”

Not to put too fine a point on this, I would posit that the seriousness and prevalence of this disease worldwide makes Vical’s HSV-2 vaccine formulated with Vical's Vaxfectin® adjuvant a significant development on the horizon…one that investors should be following closely.

Importantly, there is, currently, 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. 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.

Development of the HSV-2 vaccine is being done in collaboration with the University Of Washington School Of Medicine and the Sealy Center for Vaccine Development at the University of Texas Medical Branch under the NIH grant cited above. The initial focus will be for people already infected with HSV-2, with the goal of reducing or eliminating periodic viral flare-ups as well as viral shedding and transmission.

What had researchers and medical practitioners excited at this year’s BIO International Convention were data presented by Vical that showed its therapeutic vaccine “…significantly reduced the recurrence of HSV-2 lesions in guinea pigs with latent infection (p<0.05).” Vical also presented data for a related prophylactic vaccine that demonstrated how this version “protected mice against lethal HSV-2 challenge (p<0.0001), provided sterilizing immunity(p<0.05) and inhibited post-challenge viral shedding at the primary infection site (p<0.05) and viral load at the latent infection site (p=0.007).”

What some consider even more exciting were the results announced a month later at the DNA Vaccines 2011 Conference. According to Sean M. Sullivan, Ph.D., Vical's Executive Director of Pharmaceutical Sciences,

“[A] Vaxfectin®-formulated trivalent therapeutic version of the vaccine … significantly reduced (p<0.05) the recurrence of lesions in guinea pigs with latent infection as well as viral shedding.” In addition “… a 0.1 µg dose of the prophylactic vaccine provided 100% protection of mice against challenge with 50 times a lethal dose, and a 100 µg dose of the prophylactic vaccine provided 100% protection of mice against challenge with 500 times a lethal dose. The 100 µg dose of the prophylactic vaccine also significantly reduced viral shedding at the primary infection site (p<0.001) and inhibited viral counts at the latent infection site (pd0.05). Both the monovalent and trivalent vaccines completely eliminated primary disease and recurrent disease in a prophylactic guinea pig model.”

To say these results are significant is understatement. However, whether or not Vical can achieve equally compelling results in the clinic with human subjects obviously is the key question, and one for which both the medical and financial communities await an answer. After all, according to Vical, estimated direct costs of treating HSV-2 in the United States alone are close to $1 billion annually, primarily for drugs and outpatient medical care, plus additional indirect costs of more than $200 million. If the company is successful in developing an FDA-approved HSV-2 vaccine formulated with its Vaxfectin® adjuvant, the revenues in the US alone would push VICL into biotech’s major leagues.

Given the above, and for those who consider VICL a viable investment, know that on the basis of both it's Daily and Weekly charts, the stock's price is approaching support at $3.00. On the Daily chart, the Relative Strength is approaching the Oversold level, while the MACD line is giving indications of turning around. All of which says that barring some catastrophic event that sends the markets into a tailspin, this may be the time to add to existing positions or take an initial, small position for either trading purposes or as a long-term investment.

Disclosure: I am long VICL.