Vical posts herpes vaccine PhI/II failure, gutting shares

After suffering a Phase III immunotherapy flop in 2013 and restructuring, Vical ($VICL) delivered another piece of damaging news on Monday that sent the company's shares into penny stock territory.

The company announced that two herpes vaccine formulations--a monovalent and a bivalent--failed to meet their primary endpoint of significantly reducing HSV shedding in a Phase I/II trial and didn't perform as well as placebo. The San Diego-based biotech's shares fell 45% on the news on Tuesday.

In a statement, CEO Vijay Samant said the company is "disappointed," but that it will continue collecting data from the ongoing trial "to determine the appropriate next steps for this program."

While it collects those data, it'll keep its focus on a late-stage cytomegalovirus vaccine program with Astellas, Samant said, with additional plans for a Phase I trial of an antifungal compound. Since Astellas is paying for the CMV work, Samant said, the company should have enough cash to last into 2017 as it looks for more success.

In 2013, the company cut 47 jobs after cancer immunotherapy Allovectin was scrapped following a Phase III failure, leaving the company with about $70 million and 74 employees at that time.

Though Vical's herpes vaccine hasn't posted encouraging results, Genocea's ($GNCA) similar jab recently succeeded in Phase II as that company works its way closer to marketing the immunotherapy. It's up against Agenus ($AGEN), which is also working to bring a herpes vaccine to market, though that company's candidate is said to be disadvantaged both clinically and commercially compared to the Genocea vaccine, according to an analyst's report last month.

In his argument, GlobalData analyst Daian Cheng said that Agenus has cash flow issues--which the company denied--saying that it has shown interest in a partnership to further develop the jab.

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