By Karen Pihl-Carey

In a public offering of 3 million shares, Vical Inc. raised gross proceeds of $109.5 million, more than double what the company expected to raise when it proposed the offering in December.

Vical's stock (NASDAQ:VICL) has jumped from $18.25 a share last month, when the company proposed the offering, to Friday's closing price of $39.50, up $2 for the day.

"We're certainly not alone in having good performance over the last month in the stock. The sector seems to be doing well," said Alan Engbring, director of investor relations for Vical. "We've had good news on top of that, with the announcement of Merck starting the HIV vaccine trial. And we received an unexpected payment from Merial. So we have had a couple of news items that contributed to it."

All 3 million shares are being sold by the company at a price of $36.50 per share. An additional 450,000 shares could be sold to cover overallotments. If the underwriters exercise that option, the company would raise an additional $16.4 million. Underwriters include Goldman, Sachs & Co., of New York; BancBoston Robertston Stephens Inc., of New York; SG Cowen Securities Corp., of Boston; and First Union Securities Inc., of Chicago.

Vical, of San Diego, originally proposed to offer 2.5 million shares and an additional 375,000 shares to cover overallotments. (See BioWorld Today, Dec. 20, 1999, p. 1.)

The company plans to use all of the net proceeds for research and development expenses, including preclinical testing and clinical trials, as well as other general corporate purposes.

Engbring said the company will have a better idea of what net proceeds will be next week when the deal closes.

"Certainly, this should see us through the Allovectin registration program," Engbring told BioWorld Today. "Assuming all goes well with the trials, we should be able to launch our first product without needing to go back for more money."

Analysts estimate Allovectin-7, which uses a lipid-DNA complex to help the immune system recognize and attack cancer cells, will receive marketing approval in late 2001.

Allovectin-7 is in Phase II and Phase III trials in patients with metastatic melanoma and in a Phase II trial in patients with unresectable head and neck cancer.

Three other products also are in clinical trials: Leuvectin, which uses a lipid-DNA complex to stimulate an immune response against cancer cells, is in a Phase II trial in patients with kidney and prostate cancers; Vaxid, a naked DNA vaccine to prevent relapse of B-cell lymphoma, is in a Phase I/II trial; and another naked DNA vaccine to treat metastatic melanoma is in a Phase I/II trial in collaboration with the National Cancer Institute.

Since proposing the public offering, the company reported that Merck & Co. Inc., of Whitehouse Station, N.J., initiated a Phase I trial testing a naked DNA vaccine to prevent HIV infection. The initiation resulted in a $1 million milestone payment to Vical.

Vical also received a $1.6 million payment from Merial, a joint venture between Merck and Aventis SA (formerly Rhone-Poulenc SA), of Collegeville, Pa., for the initial exercise of options under a 1995 agreement covering naked DNA vaccines for animal health applications.

At the end of the third quarter of 1999, Vical had cash, cash equivalents and marketable securities of $38.9 million. The company had 16.2 million shares outstanding at that time.

Vical expects to release its fourth-quarter and yearly results in mid-February, Engbring said.