National Editor

With encouraging small-animal data in hand, Vical Inc. said it will begin human testing of its anthrax DNA vaccine by the end of this year.

The company's stock (NASDAQ:VICL) jumped 26 percent on the news, or 58 cents, to close at $2.81.

"It's well undervalued to begin with," said Eric Schmidt, an analyst with SG Cowen Securities Corp. in New York, noting the company had been trading at only 60 percent to 70 percent of its cash value.

"Investors have taken a pretty negative view of [the company's] therapeutics because of past failures," he said, and San Diego-based Vical is "quietly trying to reinvent itself as a vaccine company." Schmidt noted that the CEO and chief operating officer have backgrounds in vaccine development.

Collaborating with Ohio State University, the company said it has shown the vaccine is effective in protecting rabbits against lethal inhalation challenge with aerosolized Bacillus anthracis - and done so less than 10 months from initial concept. Vical met in December 2002 with the FDA to discuss an investigational new drug application.

Vical's research is partly supported by a grant from the National Institute of Allergy and Infectious Diseases, a division of the National Institutes of Health in Bethesda, Md., and the company has submitted an application for a Phase II Small Business Innovation Research grant to bolster clinical development.

The current-generation anthrax vaccine calls for a series of six injections over an 18-month period and confers immunity only gradually, taking weeks. Vijay Samant, Vical's CEO, said the company has reduced the number of injections required to two.

"We hope the stability of plasmids will be a plus, if the federal government wants to stockpile it," Samant told BioWorld Today, adding that the company intends to keep developing the vaccine on its own and hopes to get more government funding to continue.

Something of a race has begun to find vaccines for agents that might be used by terrorists - or at least to get the funding to try. In January, Avant Immunotherapeutics Inc. entered a two-year subcontract with the U.S. Department of Defense to develop an oral, single-dose combination vaccine against anthrax and plague. The deal is worth up to $8 million and is expected to take the work through preclinical testing. (See BioWorld Today, Jan. 23, 2003.)

In February, FDA Commissioner Mark McClellan said Project Bioshield, the antiterrorist initiative proposed by President Bush, would bring about "a fundamental change from the way our financing system for medical treatments works today," with "permanent, indefinite funding" for efforts by biotechnology firms. (See BioWorld Today, Feb. 28, 2003.)

"I've been asked if the Bioshield program is going to be a major factor in the biotech industry - I don't think so," Carl Feldbaum, president of the Biotechnology Industry Organization, told BioWorld Today after McClellan's speech during a BIO-sponsored conference in New York. "But it's going to be a major factor for those companies that participate."

Such a boost might be just what the doctor, or the military, ordered for Vical, which said last fall it would not complete its Phase III low-dose trial of Allovectin-7 in metastatic melanoma, would close a Phase II trial of Allovectin-7 for early stage head and neck cancer and would no longer develop Leuvectin for prostate or kidney cancer. (See BioWorld Today, Sept. 19, 2002.)

Vical last year discontinued a Phase II trial of Leuvectin, which used lipid DNA complex with a gene encoding interleukin-2 to stimulate an immune response in kidney cancer. It has one clinical program remaining, with Allovectin-7, which also deploys a lipid DNA complex, in a high-dose Phase II trial for multiple tumor types. (See BioWorld Today, April 23, 2001.)

Results from the high-dose trial are expected to be disclosed at the American Society of Clinical Oncology's meeting in late May and early June.

"No question this could be a bust," Schmidt told BioWorld Today. "Definitely, cancer immunotherapy historically has had a far worse track record than vaccine development."

Whatever happens with Allovectin, which is designed to make the immune system attack a rare allele type, Samant noted the anthrax vaccine trains the system to recognize a foreign antigen.

"We think we'll be the first company to go after the two-animal rule in a new vaccine setting," Samant said, noting that the vaccine also has proven encouraging in mice. "Then, we'll start discussing with the FDA what needs to be done."

He said the rule, which requires demonstration of effectiveness in two animal species in addition to safety in humans, is not clear about which two species of animal must be tested, and Vical may do a non-human primate study on its own.

"The FDA is very cautious and a lot of changes are occurring, and they're very supportive," he said.

Vical has another vaccine in the pipeline. The company in February said a DNA-based vaccine against cytomegalovirus (CMV), which is its first independent development program focused on infectious diseases, will enter Phase I by the end of the year. Schmidt noted in a research report that about 30 percent to 60 percent of transplant patients succumb to CMV infection, which often results in transplant rejection, other serious illness or death.

He allowed that the results of the high-dose Allovectin-7 to be disclosed at the ASCO meeting will be closely watched, but said the cancer immunotherapeutics area is not where the future value will lie in the company.

"The focus more and more, going forward, will be on other vaccine programs" in-house and with existing partners, he said.