Senior Staff Writer

It was more than a year ago that Vical Inc. settled on a special protocol assessment with the FDA for a Phase III trial of the cancer immunotherapeutic Allovectin-7, but the trial has yet to begin. Vical on Tuesday said it gained funding for the pivotal study through a collaboration with Tokyo-based AnGes MG.

The agreement gives AnGes exclusive Asian marketing rights to the product, and Vical $22.6 million in cash and equity funding over a series of payments that will cover the estimated cost of the trial. The payments include a $6.9 million initial equity investment. If Allovectin-7 is commercialized, Vical is entitled to up to $77.5 million in sales-based milestone payments from AnGes - making the alliance worth about $100 million.

"We're very excited to have this agreement in place and to start moving forward with this trial as quickly as we can," said Alan Engbring, Vical's executive director of investor relations, noting that "the SPA has been out there since February of 2005."

The FDA agreed to a special protocol assessment last year, outlining the objectives, endpoints and analyses related to the high-dose (2 mg) study of Allovectin-7 in patients with metastatic melanoma. (See BioWorld Today, Feb. 11, 2005.)

The start of the trial was on hold because the company was "actively looking for a partner through that entire period," Engbring told BioWorld Today.

San Diego-based Vical licensed exclusive worldwide rights to its non-viral gene delivery technology to AnGes in May 2005. AnGes is using the technology to develop DNA-based products encoding hepatocyte growth factor (HGF) for cardiovascular applications. The partnership has led to the larger agreement for Allovectin-7.

With the $22.6 million in payments, AnGes will fund the Phase III pivotal trial that Vical will conduct in the U.S. It plans to recruit additional clinical sites at the upcoming annual meeting of the American Society of Clinical Oncology.

If Allovectin-7 reaches the U.S. market, Vical will pay AnGes mid-single-digit royalties that will increase to double digits on a tiered basis. It will pay low single-digit royalties on the rest-of-world sales. If marketed in Asia, AnGes will pay double-digit royalties for sales in Japan, and mid-single-digit royalties for sales in all other Asian territories it covers, which include Taiwan, South Korea, China, Hong Kong, Malaysia, Indonesia, Thailand and Singapore.

Either company may work with a commercialization partner in their respective territories.

"The melanoma market is a focused market, a targeted market. A company of our size could" market Allovectin-7 on its own, said Vijay Samant, president and CEO, in a conference call Tuesday. "But we haven't made a decision on that."

He does, however, believe that starting the Phase III trial in the U.S. "will now allow us to gather momentum in order to find a partner in Europe."

Vical has given no timeline as to how long the Phase III trial might take or when a regulatory filing will be before the FDA. It also has not given guidance on sales of Allovectin-7 because "as soon as we put a number out there, it becomes an albatross that you have to live with," Engbring explained.

A Japanese regulatory filing would require AnGes to conduct another small trial - probably less than 100 patients, Samant said, adding that the data could "piggyback" on Vical's U.S. package for approval.

The trial is designed to enroll about 375 patients with recurrent metastatic melanoma. They will be randomized on a 2:1 basis and may have been treated with surgery, adjuvant therapy or biotherapy, but cannot have been treated with chemotherapy. About 250 patients will receive Allovectin-7, and about 125 will receive their physician's choice of either dacarbazine or temozolomide.

"The primary endpoint for this trial is a statistically significant difference with the overall durable response rate at 24 weeks," said David Kaslow, Vical's chief scientific officer.

Allovectin-7 is a plasmid/lipid complex that contains the DNA sequences encoding HLA-B7 and beta-2 microglobulin, which together form MHC-I antigen. Injecting the product directly into tumor lesions may augment the immune response against local and distant tumors.

The American Cancer Society estimates there will be about 62,000 new diagnoses of melanoma in the U.S. this year, and about 7,900 deaths from the disease. There are two approved therapies that commonly are used, dacarbazine and interleukin-2, as well as other therapies used off label, Engbring said. But the two approved therapies have shown serious or life-threatening side effects in several treated patients.

Temozolomide is an oral prodrug that converts the body into the same active compound as dacarbazine. It is approved for certain types of brain cancer.

Vical's stock (NASDAQ:VICL) rose 47 cents Tuesday to close at $6.55.