Nobody else here seems to be a VICL fan, which is my top biotech pick. A good senopsis (I cut & pasted as well not knowing how long the articles remain, but the link has links to similar articles.
worldlyinvestor.com
For the past couple of years the biotech industry has suffered a relapse. It's hard to believe that the industry was once almost as hot as the Internet sector is now.
But, thanks to recent developments in gene
therapy, biotech may be poised for a
breakthrough. And Vical (quote, chart, profile)
is one company that may bring the entire
sector back to life.
"Vical is a leader in gene therapy, a sector
that we believe will begin to gain visibility this
year," said BancBoston Robertson Stephens
in a recent report.
Vical's patented "naked DNA" technology has
put the company in a league of its own. The
company uses naked DNA and proprietary
cytofectins to deliver selected genes into
certain cells to produce proteins that act to
prevent or treat a variety of diseases and
disorders.
Currently, the company is developing its own
product candidates for cancer, while
developing vaccine and therapeutic protein
product candidates for infectious diseases and
metabolic disorders in conjunction with many
high profile corporate partners.
Unfortunately, Vical's stock price doesn't
reflect the strong strides the company has
made this year. The stock's most recent high,
$19.50, was reached at the end of May 1996.
Since then it has moved progressively
downhill, nearing its all time low of $7.66,
reached in August of 1998.
Patented "Naked DNA" Technology
One of the biggest hurdles in gene therapy is
effectively and safely delivering the required
gene to target cells in sufficient quantities.
Most gene transfer therapies rely on non-viral
or viral (transmission via a virus) vector
technologies for gene delivery. Viral vectors
suffer certain drawbacks, including adverse
immune responses, tissue inflammation that
may hinder the therapy, and the inducement of
changes in the patient's genetic makeup.
Vical has developed a patented non-viral
technology for genetic transfer, whereby the
company's synthetic DNA formulations, better
known as "naked DNA," that are combined
with plasmids containing the required gene,
can be delivered via intramuscular injection
directly into cells.
For delivery into non-muscular tissue, Vical
adds cytofectins, proprietary lipid, or fat,
substances. These positively charged lipid
molecules are combined with negatively
charged DNA, which can be delivered directly
to the patient using a syringe or a catheter.
"Vical has a novel approach," says Nick
Woolf, biotech analyst for BancBoston
Robertson Stephens. "Using charged fats to
part into cells - it's an elegant concept."
Vical's delivery technologies are deemed to be
more convenient, safer, and more
cost-effective than viral vectors or ex-vivo (out
of body) approaches.
Vical currently has three major products that
are in advanced stages of clinical trials.
Allovectin-7, which uses a lipid-DNA complex
to help the immune system attack cancer
cells, is in Phase III testing for melanoma and
in Phase II testing for head and neck cancer.
BancBoston expects trials for Allovectin-7 for
melanoma to be completed in mid-2000 and
believes that a product launch in 2001 is
possible.
Another product, Leuvectin, which uses a
lipid-DNA complex to stimulate an immune
response against cancer cells, is in Phase II
testing for renal cancer, and in Phase I/II for
prostate cancer. Vaxid, a naked DNA vaccine
to prevent the relapse of B-cell lymphoma, is
in Phase I/II testing.
In the Pipeline
In collaboration with many pharmaceutical
firms, Vical has moved to the
research/preclinical stage for preventive DNA
vaccines and therapeutic protein DNA for a
variety of infectious diseases and metabolic
disorders.
"The company has established partnerships
with top pharmaceutical companies, leveraging
preventive and therapeutic vaccine applications
of it naked DNA technology," said the
BancBoston report.
Partners include Merck (quote, chart, profile),
Pfizer (quote, chart, profile), Pasteur Merieux
Connaught, Rhone-Poulenc Rorer (quote,
chart, profile), Centocor (quote, chart, profile),
Merial, and Boston Scientific Corporation
(quote, chart, profile).
Merck has invested roughly $17 million for
licenses using Vical's naked DNA technology
for seven infectious diseases, including
influenza, HIV, herpes, hepatitis B and C, and
tuberculosis. Merck is expected to advance an
HIV vaccine into human testing by the first half
of 1999.
The company has an agreement with Pasteur
Merieux Connaught to develop vaccines
against malaria, lyme disease, and H. Pylori.
Vical has received $7.4 million from Pasteur
Merieux Connaught for developing vaccine
products using both naked DNA and cytofectin
technologies.
Vical is also working with Genzyme to develop
therapeutic protein DNA for cystic fibrosis, and
is working on its own accord to develop a DNA
vaccine for chlamydia. To date, Vical has
received $2.3 million from Genzyme.
Most recently, Vical has entered into a license
and option agreement granting Pfizer the
rights to use Vical's patented naked DNA
gene delivery technologies for certain animal
health applications. Pfizer is paying Vical $8.5
million, but Vical stands to gain more than $40
million on product sales.
Other agreements with Centocor,
Rhone-Poulenc Rorer, Merial, and Boston
Scientific have thus far generated roughly $4
million.
On the Verge of a Breakthrough
As with any biotech company, there are risks,
namely exorbitant costs, delays in product
development, regulatory issues, and
unreliability of revenue streams and, therefore,
earnings.
Vical reported fourth quarter 1998 revenues of
$932,000 versus $2.33 million for the same
period in 1997. Total revenues for 1998 were
$5.9 million versus $7.8 million in 1997. Vical
reported a 1998 net loss of $7.5 million versus
$5.6 million in 1997. The company has posted
losses since going public in 1993.
In addition, partners have complete control
over the development process and may
terminate agreements, although this is highly
unlikely.
But, BancBoston believes that Vical is off to a
healthy start this year, especially in the way of
its proprietary products, Allovectin-7 and
Leuvectin.
"Initial clinical data looks good," days Woolf.
At this stage of the game, the team rates the
company as a buy.
Moreover, BancBoston believes in the theory
that "biotech companies which invest in
clinical development of their products prior to
licensing them will preserve the greatest
value."
Currently, Vical's stock trades around the $10
level. Continued positive results of clinical
trials may lead to major breakthroughs, not
only for gene therapy, but also for Vical's
stock.
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