Vical Inc. announced late Thursday that it has filed aregistration statement with the Securities and ExchangeCommission (SEC) for an initial public offering of 3 millionshares of common stock at $9-11 per share. Hambrecht & Quistand Vector Securities are co-managing the offering.

Vical of San Diego said it plans to use the proceedings forresearch and development, including preclinical and clinicalstudies, facilities expansion and general corporate purposes.

Vical develops gene-based drugs for human gene therapy. Thekey discovery leading to Vical's proprietary direct genetransfer technology was that under certain conditions, somemuscle tissues are able to absorb genetic material andsubsequently express a desired protein for periods rangingfrom weeks to several months.

In addition, the company is developing other gene transfermethods that may allow the delivery of genes directly intonon-muscle tissues, including the use of lipid molecules termedcytofectins that facilitate direct absorption of genes into cells.

The company was "officially formed in 1987 to develop lipidtechnology to chemically modify drugs to improve theirpharmacology," explained Robert Zaugg, Vical's senior directorof business development. But Vical "licensed all that technologyto Vestar in May, he added. At that time the San Dimas, Calif.,company (NASDAQ:VSTR) purchased exclusive worldwiderights to Vical's lipid "prodrug" technology for orallyadministered compounds to treat cancer, AIDS and systemicinfections.

This deal was the first of what Vical hoped would be a "seriesof transactions to put the oral lipid technology into the hands ofothers and allow it to focus on its core gene therapy business,"Zaugg said.

Vical licensed rights to a different lipid technology, usingcationic lipids, for use in antisense applications to IsisPharmaceuticals Inc. (NASDAQ:ISIP) of Carlsbad, Calif., lastMarch.

Vical retained the rights to the cationic lipid technology for usein gene therapy, although the company has found that lipidsaren't always required to obtain gene expression. Vical's "directgene transfer technology requires no viral components, cellularhosts or other delivery vehicles," Zaugg told BioWorld. Inanimal studies, at least, it's possible to get expression fromnaked DNA in muscle tissue. But DNA uptake into non-muscletissues is facilitated by Vical's specialized lipids, or cytofectins,Zaugg said. Vical received a $500,000 small business innovationresearch (SBIR) grant from the National Institutes of Health lastNovember to further develop these cytofectins.

Also in November Vical acquired the rights to two separategene therapy technologies that are being developed at theUniversity of Chicago School of Medicine (by Jeffrey Leiden)and at the University of Michigan (by Gary and ElizabethNabel). Both of these groups are developing ways to administergenes or DNA constructs to patients directly.

Vical raised $9.5 million in an oversubscribed round of venturefinancing last March. The round was led by Venrock Associates,along with U.S. Venture Partners, Grace Horn Ventures,Sorrento Associates, Hillman Ventures, Morgenthaler Venturepartners, Security pacific Capital and Sutter Hill Ventures.

In June 1991, Vical and Merck & Co. Inc. entered into acollaboration to develop vaccines for human infectious diseases,using Vical's gene therapy technology for vaccine delivery.

-- Jennifer Van Brunt Senior Editor

(c) 1997 American Health Consultants. All rights reserved.

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