Continued uptrend in Vical shows promise Print E-mail
By M.E.Garza   
Monday, 18 July 2011 05:48
Penny StockShares of Vical Incorporated (Nasdaq:VICL) jumped +7.21% to $4.61 on Friday and continue to show some firepower following news that it has granted a global license to Japan's Astellas Pharma Inc. (TOKYO:4503).

Vical and Astellas Announce Worldwide License Agreements for TransVax(TM) Cytomegalovirus Vaccine

At the end of last week, both companies announced that they have signed exclusive license agreements for the United States and for all territories in the rest of world outside the United States to develop and commercialize TransVax(TM), Vical's therapeutic vaccine designed to control cytomegalovirus (CMV) reactivation in transplant recipients. The companies expect to begin a multinational Phase 3 registration trial of TransVax in hematopoietic stem cell transplant (HSCT) recipients as well as a Phase 2 trial in solid organ transplant (SOT) recipients in the first half of 2012.

The companies expect to begin a multinational, Phase 3 registration trial of the cytomegalovirus vaccine, dubbed TransVax, in certain stem-cell transplant recipients. They also plan a Phase 2 trial in solid organ transplant recipients in the first half of next year.

Cytomegalovirus can cause respiratory illness and is suppressed by the immune system in most people. But it can cause transplant rejection if it flares up when a transplant recipient's immune system is suppressed during recovery.

The companies' pact calls for Astellas to cover all costs to develop the drug further and commercialize it.

Vical has an option to co-promote TransVax in the U.S., and will assist Astellas in manufacturing the drug, as well as in handling regulatory and certain development functions.

In return, Astellas has agreed to reimburse all of Vical's future costs, including personnel and external expenses.

Vical is scheduled to receive $35 million in payments, but could potentially receive up to $130 million in total upfront and milestone payments through commercial launch and double-digit royalties on net sales, the company said.

Technically speaking, the stock is showing some strong price support with rising volume at the $4.18 level and could see a run to $5.40 and beyond if it manages to break past $ 4.99- the previous 52-week high.  Biotech analysts at Conaccord Genuity have a price target of $8 for VICL.

In addition to a strong uptrend in stock price, the stock is showing very bullish short, intermediate and long term Exponential Moving Average (EMA) figures which can be used to identify the direction of the trend or define potential support and resistance levels. It's also interesting to note the hammer candle which was formed last Friday since this pattern could indicate the basis for new strong support levels.

The stock has nearly 72 million shares outstanding- of which 5.63% is owned by insiders and 56.5% is owned by institutions. Approximately 4.9 million of those shares are short with only 8 days left to cover.

A look at our FDA Trade Catalyst Calendar shows a couple of key milestones- including the end of VICL's Phase III trial for Allovectin-7 as a First Line Therapy against Stage III or IV Metastatic Melanoma.

The Phase III trial, initiated in January 2007, is evaluating Allovectin-7 as first-line therapy in patients with Stage III or IV recurrent metastatic melanoma. Vical completed enrollment in February 2010 of approximately 390 chemo-naive patients randomized on a 2:1 basis: approximately 260 for treatment with Allovectin-7 and approximately 130 for treatment with either dacarbazine or temozolomide. The company expects to complete patient follow-up and lock the Phase III clinical trial database in the second half of 2011. Our staff tracked that milestone after the company issued an official news release about the event on February 14th, 2011. As mentioned earlier, the company also shows a key milestone related to the late stage trial for TransVax- currently scheduled for the first half of 2012.

Previsously published results from a completed Phase 2 trial of Allovectin-7 in 127 chemo-refractory or chemo-intolerant patients with metastatic melanoma compare favorably with historical controls from other studies. Among the 15 responders (11.8%), 4 had complete responses and 11 had partial responses. The median duration of response was 13.8 months, and all responses were durable, lasting at least 6 months. The median survival for all patients was 18.8 months.

Disclosure: None

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