Shares Plunge as Vical Sees A Second Trial Flop in Six Months

Stocks

Six months after San Diego-based Vical saw a late-stage stem cell transplant trial flop, the company reported another fail. The company said its Phase II herpes drug did not meet its primary endpoints and will terminate the program.

The news sent company shares plummeting nearly 25 percent in premarket trading. Shares of Vical were trading as low as 40 cents, a significant plunge from Friday’s close of $1.63.

Vical’s double-blind and placebo-controlled mid-stage study was investigating its therapeutic bivalent vaccine candidate for herpes simplex virus type 2 (HSV-2). The company said the treatment failed to hit the mark when it came to its annualized lesion recurrence rate. Vical said the rate was calculated based on those genital recurrences that were both clinically- and virologically-confirmed during a minimum of nine months of surveillance.  

This is a significant blow for the company that initiated a restructuring in January following the failure of its Phase III vaccine for stem cell transplant recipients. Part of that restructuring included the termination of about 54 percent of employees and the announcement it was focusing its resources on two mid-stage candidates, which included its now-terminated HSV-2 therapeutic vaccine, VCL-HB01. Vical has not indicated if the latest trial failure will result in any additional layoffs.

Vijay Samant, president and chief executive officer of Vical, said company researchers took “careful measures” to recruit patients for the trial. The mid-stage study included 261 healthy HSV-2 seropositive adults who ranged between the ages of 18 and 50 years. The patients had a self-reported history of four to nine recurrences per year. Despite those measures, Samant said the annualized recurrence rate in the placebo group during the Phase II trial was far less than what researchers had expected based on the patients’ self-reported history. Because of that, Samant said there was “significantly less power to show a vaccine effect in this trial.”

“We are extremely disappointed with the outcome and based upon these results, we will be terminating the HSV-2 program,” Samant said in a statement. “In the meantime, we remain focused on our novel antifungal VL‑2397, which we licensed from Astellas and has the potential to be the first in a new class of antifungal drugs.”

VL‑2397, an antifungal drug candidate, was licensed from Astellas. Vical said the therapeutic has the potential to be the first in a new class of antifungal drugs. VL‑2397 is currently in a Phase II trial. In that trial VL‑2397 is being compared with 2397 with standard first-line treatment for invasive aspergillosis in immunocompromised adults, which Samant said would be “eligible for a Limited Use Indication assuming a successful outcome of the trial.”

In addition to its remaining Phase II drug, Vical said it will continue the preclinical development of a novel treatment for chronic HBV infection, which is based on the company’s DNA and lipid-delivery technologies. Samant said the initial aim of Vical’s HBV program is “to demonstrate proof of concept for inhibiting HBV infection in an in vivo model.”

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