Vical Jumps On Report Of Merck Work
NEW YORK (Reuters) - Vical Inc.'s (Nasdaq:VICL - news) stock surged 35 percent Friday after a newspaper article reported the largest U.S. drug maker, Merck & Co. Inc., was testing an AIDS vaccine that uses the company's technology.
Shares of San Diego-based Vical jumped 3 13/16 to 14 7/8 in Nasdaq trading, making it Friday's second biggest percent gainer, with over 3.5 million shares changing hands.
Analysts linked the sharp gain to an article in Friday's Wall Street Journal, which said Merck was planning to begin the first human tests of two promising experimental vaccines for use against AIDS developed as part of a secretive research effort.
''When (Merck) is using your technology, it's obviously a big boon,'' said Hambrecht & Quist biotechnology analyst Richard Van Den Brook.
Merck's top vaccine executive, Emilio Emini, said the company planned to begin administering the vaccines in a small number of healthy, uninfected volunteers by year's end.
The executive, Emilio Emini, told the WSJ the human tests would be undertaken to help Merck scientists determine if the vaccines could produce in people the kind of immune-system reaction generated in animal studies.
Several other companies are testing prototype vaccines in large and small trials in the United States and abroad. But one of the Merck vaccines will be among the first among a class of so-called ''naked DNA'' vaccines for HIV to go into humans.
Merck licenses the technology of ''naked DNA'' from Vical, which owns the patent to the technology.
''Naked DNA'' is potentially revolutionary because it stimulates both arms of the immune system, antibodies and T-cells, which are immune cells made by the thymus gland.
Traditional vaccines only stimulate antibodies.
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vical.com
MERCK LICENSES VICAL'S ‘NAKED' DNA TECHNOLOGY
FOR THERAPEUTIC VACCINES
SAN DIEGO - November 4, 1997 - Vical Inc. (Nasdaq:VICL) announced today the signing of an agreement granting Merck & Co., Inc. (NYSE:MRK) certain rights to develop and market therapeutic vaccines against the human immunodeficiency virus (HIV) and the hepatitis B virus (HBV) using Vical's patented “naked” DNA technology. Under the agreement, Merck is making an investment of $5 million in Vical common stock at a premium over fair market value. If products are successfully developed by Merck using the Vical technology, Vical may also receive up to $18 million in milestone payments, plus royalties on product sales. In addition, Vical may have the option under certain conditions to co-promote the products in the United States.
The new agreement grants to Merck exclusive worldwide rights to use Vical's proprietary naked DNA technology for therapeutic vaccines against HIV and HBV. Vical had previously licensed the technology to Merck and others for use in the development of preventive vaccines including HIV and HBV. Merck also holds a license to use the technology for a therapeutic vaccine against the human papilloma virus (HPV). Preventive vaccines prime the body's immune system to respond to potential future infections by foreign organisms. Therapeutic vaccines trigger or boost the body's immune system to respond to existing infections by foreign organisms.
Alain B. Schreiber, M.D., Vical's President and CEO, said, “We are pleased that Merck has expanded its commitment to naked DNA technology with these new therapeutic vaccine applications. We are gratified to count Merck among our shareholders and to potentially benefit from an opportunity to co-promote important products in the United States.”
Vical scientists and collaborators discovered that direct administration of naked DNA can result in the expression of the protein encoded by the genetic material and proposed the application of this discovery to vaccine research. Vical and Merck scientists published the initial demonstration of naked DNA technology in a preclinical model and have demonstrated its application as a novel vaccination technique in a variety of animal infectious disease models. Merck is currently conducting early clinical trials of a preventive naked DNA vaccine against the influenza virus.
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