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Vical Incorporated has made substantial
progress in the development of their DNV vaccines over the last 12 months with 3 programs
now in or about to enter Phase 3 clinical trials and 2 in Phase 2
Healthcare
Biotechnology & Drugs
(VICL-NASDAQ)
Vical Incorporated
10390 Pacific Center Court
San Diego, CA 92121
Phone: 858-646-1100
Vijay B. Samant
President and CEO
Interview conducted by:
Walter Banks, Publisher
CEOCFOinterviews.com
Published – February 15, 2007
BIO:
Vijay B. Samant joined Vical as President and Chief Executive Officer in November
2000. Mr. Samant has 23 years of diverse U.S. and international sales, marketing,
operations, and business development experience with Merck. From 1998 to mid-2000, he was
Chief Operating Officer of the Merck Vaccine Division. From 1990 to 1998, he served in the
Merck Manufacturing Division as Vice President of Vaccine Operations, Vice President of
Business Affairs, and Executive Director of Materials Management. Mr. Samant earned his
M.B.A. from the Sloan School of Management at the Massachusetts Institute of Technology in
1983. He received a master's degree in chemical engineering from Columbia University in
1977 and a bachelor's degree in chemical engineering from the University of Bombay,
University Department of Chemical Technology, in 1975.
Company Profile:
Vical researches and develops biopharmaceutical products based on its patented
DNA delivery technologies for the prevention and treatment of serious or life-threatening
diseases. Potential applications of the company’s DNA delivery technology include DNA
vaccines for infectious diseases or cancer, in which the expressed protein is an
immunogen; cancer immunotherapeutics, in which the expressed protein is an immune system
stimulant; and cardiovascular therapies, in which the expressed protein is an angiogenic
growth factor. The company is developing certain infectious disease vaccines and cancer
therapeutics internally. In addition, the company collaborates with major pharmaceutical
companies and biotechnology companies that give it access to complementary technologies or
greater resources. These strategic partnerships provide the company with mutually
beneficial opportunities to expand its product pipeline and address significant unmet
medical needs. Additional information on Vical is available at www.vical.com.
CEOCFO: Mr. Samant, will you tell us
about the company?
Mr. Samant: “We are a unique company in
the sense that our technology has a variety of applications and we can make the product
based on our technology very easily in relatively modest assets that do not require a lot
of capital expenditure. Broad applications and reasonable capital expenditures are two
very pivotal anchors in terms of making any technology successful. We can apply our
technology for vaccines; we can apply it for proteins, animal health applications, cancer.
We are focusing on vaccines because vaccines are now probably the single most important
medical advance that is going to be required in the next fifty years to deal with a
variety of diseases as well as a variety of cancers. We are focused on one of the most
lucrative applications of this technology.”
CEOCFO:
Are vaccines commonly delivered by DNA technologies?
Mr. Samant: “No, there are a variety of
ways to make vaccines and the most conventional way to make vaccines is live attenuated
vaccines, killed vaccines and sub-unit protein vaccines. The problems with those
technologies are that they take a long time to develop, they are very expensive to
develop, and they require a huge amount of expertise that very few companies have. The
beauty of our concept is that we don’t need to handle the pathogens. All we need to
know is with what the gene sequence is associated. For example, if I am wearing a
particular necktie and if that necktie is a distinguishing feature, then all we need to
know is the gene sequence for a necktie. We would then code that sequence into the
plasmid, inject that into the muscle cell and use the cell’s protein manufacturing
factory to make that protein or antigen. With the conventional technologies, you have to
make the protein or antigen outside. If you make anything on the outside, it is very
expensive to make compared with teaching the body’s own manufacturing factory to make
it. You do not handle the pathogen as opposed to when you are dealing with the other
technologies; you need to deal with the bug itself in the laboratory; that creates
complications in terms of fragility. The bug is a very hard thing to handle, so you need
specialized facilities. You then need to make sure it grows correctly and is reproducible.
Whereas in our case, all we need is the recipe and you give it in a DNA plasmid form and
you can make it over and over again.”
CEOCFO: You have several drugs in Phase 2
and Phase 3 studies; will you tell us where you are in the development of some of your
vaccines?
Mr. Samant: “About 18 months ago, we
did not have a single program in Phase 3 between us or our partners. We made substantial
progress in the last 12 months. We have 3 programs that are either in or about to enter
Phase 3. We have 2 programs which are in Phase 2. For a company of our size, that is a
remarkable achievement. We have a Phase 3 program for Allovectin-7®, which is a product
for melanoma; it is a pivotal efficacy trial, meaning if we meet the endpoints in the
trial, the likelihood of getting approval is high. Nothing has been approved in melanoma
for many years. This is a frontline therapy and we are excited. Our Phase 2 study in
melanoma had shown that our drug was pretty well tolerated. It was given to
chemo-refractory patients in an outpatient setting, who take the drug and go home. Most of
the current melanoma treatments are pretty toxic and the patients require hospitalization.
This is a 375 patient study and we just started recruiting. We are excited because we have
the opportunity to provide a safe effective immunotherapy as an alternative to patients,
which they do not have right now.
The second Phase 3 study, which is also pivotal efficacy, is being conducted by our
partner AnGes MG, Inc., and what they are conducting is a pivotal efficacy study in people
who have blockages of arteries in the legs or limbs. If you get blockages in the legs, it
leads to ulcers, which are not curable. It leads to very serious pain and difficulty in
walking. They are actually injecting at the site of the blockage, a gene encoding an
angiogenic growth factor that promotes the growth of blood vessels. What you do in a sense
is grow blood vessels and by-pass the blockage, curing the pain, curing the ulcer and
improving the patient’s lifestyle. Most of these patients are diabetic. It is an
elderly group, which has a huge commercial potential. The Japanese company AnGes MG is
conducting a double-blind efficacy pivotal trial. Pivotal trial means that if you get the
right data, you have a good chance of the agency approving it for commercialization. That
trial is double-blinded meaning that neither the doctors nor patients know who is getting
what. The beauty is that after getting the drug or the placebo, the patients are evaluated
and in Japan the way the trial has been designed, is unblinded so the patients who got the
placebo have the option of getting the drug. It is a compassionate way of making sure that
the patients who may benefit from the new treatment don’t just come into the trial
and go home. The trial has been recruiting for two years and it is unblinded on each
patient after they are evaluated so the Japanese must have some data; but we do not know
what the data are. We are pretty excited how the trial is going. If everything goes well,
they will be filing to the Japanese agency for approval by the end of this year, which is
what we have been told. We will see how that all pans out. We expect a similar Phase 3
trial for the same indication to be conducted by a major pharma play known as Sanofi
(Sanofi-Aventis Group – Euronext: SAN, NYSE: SNY), who also have great Phase 2 data
on that study and they will be starting their Phase 3 study this year. We have three Phase
3 studies, two of them in the field of angiogenesis, one in the field of melanoma. The
angiogenesis studies are completely financed by our partners and if they are successful,
we stand to gain mid single digit royalties and milestone payments.”
CEOCFO:
Were the angiogenesis technologies through an acquisition?
Mr. Samant: “It is our core technology
that both the partners are using. The sequences or the genes that encode growth factors to
promote the growth of blood vessels are proprietary. They are owned by those companies.
But they can’t use those genes without our plasmid DNA technology. What we are
licensing here is our delivery method; they have their proprietary gene sequences. Both of
them are using unique gene sequences. If you are going to ask me, which one is better? We
hope both are good for our sake.”
CEOCFO:
What about the Phase 2 studies?
Mr. Samant: “The first study that we
are doing in Phase 2 is for cytomegalovirus (CMV), which is a herpes virus, a benign
pathogen, but if your immune system is compromised, it creates all kinds of complications.
That is because CMV hides in your body and comes back when your immune system is not
working at its full potential. It occurs in bone marrow transplant patients and solid
organ transplant patients. The real opportunity is in congenital CMV when females of
child-bearing age are CMV negative and they get pregnant and get infections with CMV. That
causes major complications that lead to kids that are born with mental retardation, and
birth defects. You heard of this new Human Papillomavirus (HPV) vaccine; CMV is the next
frontier after HPV. It is not a sexually transmitted disease but it is like the old German
measles where kids were born with a lot of defects and that has been completely wiped out.
The market segments in that field are bone marrow transplant patients, which is a smaller
market, solid organ transplant patients, which is the next market and the real big market
is females of child-bearing years.
We are going after the bone marrow transplant patients first to get a proof of concept
study and if we are successful, the next market is to migrate to solid organ transplant
patients or more importantly to females of childbearing years where the commercial
opportunity is huge. The biology of protection for CMV is reasonably well understood. That
means you know which segments you need to invoke an immune response against to destroy CMV
as a pathogen so you can afford protection. A lot of diseases lack biology of protection
that is clearly understood and HIV is a good example; you really don’t understand the
biology of protection. In CMV, a lot of work has been done historically, so that is very
well understood. We can show proof of concept in the bone marrow transplant setting. We
may decide to jump directly from there into a congenital CMV vaccine trial for females of
childbearing age to get a proof of concept there. We own the intellectual property on the
core technology. We own the intellectual property on the gene sequences, which we have
licensed from other players. We own core technology on the formulations that we are using
in the program. We are pretty excited about this trial. It is a slow recruiting trial, but
once we get the data from this trial, it could lead to a huge commercial opportunity for
this company.
The second Phase 2 study the study that the NIH (National Institutes of Health) is
conducting right now. It is a 550 patient study in which they are going into healthy
volunteers to see whether the vaccine can generate sufficient immune responses against
important markers in the HIV pathogens. The goal here is that if you get good immune
reactions against HIV, then that vaccine may work to prevent the further spread of HIV
through sexual transmission. This is a proof of concept study. The Phase 1 study that they
conducted showed great immune responses and if those are maintained in this Phase 2 study,
this will allow them to go to a larger Phase 2 proof of concept study in high risk
individuals. High-risk individuals in HIV are patients where one of the partners is HIV
positive and the other is HIV negative. Their goal is to vaccinate these high-risk
individuals and see if the vaccine group gets better protection than the placebo group.
That is a several thousand patient study, which will start toward the third quarter of
this year. The NIH is conducting it and it is known as the PAVE study. We are making the
vaccine constructs for that study for which we have a contract for about $12 million
dollars. Most of that vaccine has already been shipped and more remains to be shipped.
That is another large Phase 2 study that will be conducted in addition to the study that
is going on. Therefore, we have five advanced clinical programs; three Phase 3; two Phase
2.”
CEOCFO:
Are there any other DNA vaccines on the market or will you be the first?
Mr. Samant: “It is our technology so
nothing has been approved in humans, but there is already a vaccine approved in the animal
health area by one of our licensees known as Aqua Health Ltd. (Novartis AG – NYSE:
NVS), which has been used for treating salmon in hatcheries. Most of the salmon that is
coming to the United States from Canada is vaccinated with our vaccine. These salmon
raised in hatcheries are all Atlantic salmon and any time they are exposed to Pacific
salmon, it gives them a rare type of infection and kills almost 80%. Our partner, who
conducted a clinical trial with 3 million fish, had almost a 90% protection for one year,
so that vaccine is now approved in Canada. This is a DNA vaccine approved in a
food-producing animal to be consumed by humans. They have gone through extensive safety
testing. This is a vaccine where individual fish are vaccinated and it is a low margin
business, which tells you the economics of how we can make this vaccine inexpensively.
That is one of the first targets that have been approved. Secondly, we expect our partner
Merial Ltd. (Merck/Sanofi animal health joint venture), which is the world’s largest
animal health company, to get a vaccine approved for melanoma in dogs. You may not be
aware but melanoma is a serious disease in dogs. In companion animals, if your pet gets
melanoma, you are willing to spend a lot of money. It is a decent market; they already
have a letter from the U.S. Department of Agriculture that this vaccine should get
approved in the near future. We expect it to be approved some time the first quarter. This
is again another validation. The third target is that the CDC has shown that one vaccine
can protect horses against the West Nile virus. We have demonstrated in fish, we are about
to demonstrate in dogs and others have demonstrated in horses. We have shown three large
diverse animal markets. We are getting close to getting approved in humans through a
variety of programs. We are fast approaching validation in humans.”
CEOCFO:
Would you be the first company to have a DNA vaccine for humans?
Mr. Samant: “I hope so! That is the
goal. If it is not us, it will be one of our licensees because we own the core
intellectual properties, so if anyone else is doing anything, they are going to need to
get a license from us.”
CEOCFO:
Can you handle all of this diversification?
Mr. Samant: “We can because in most of
our programs, the partners are spending all the money on it. Our programs are primarily
Allovectin-7® and CMV, and we have sufficient money. We raised about $50 million in the
last two quarters; we have about $100 million in cash, so we have sufficient money to do
what we need to do.”
CEOCFO:
In closing, tell us if you will need to raise any more funds?
Mr. Samant: “Not at this stage, we just
raised $50 million. However, as a biotech company you will always need to be savvy if the
opportunity arises in the market. The stock price is reflective of your strength. You
always have the ability to raise money. We have a shelf of $100 million so we are
flexible. There is no urgency to raise money at this stage. We have a great management
team and a great board with a lot of strategic insight on how biotech companies operate.
We have great partners and one partner is the National Institutes of Health, which is one
of our largest collaborators who will be spending almost $100 million on clinical trials
to support this technology. Therefore, we have big corporate partners, a big federal
government partner, solid management team and great board. We also have great
shareholders, one of the best set of institutional shareholders. One of the recent
shareholders we got was the government of Singapore’s financial arm, known as
Temasek, which invested $25 million in the company. Temasek does not invest money in the U.S.
companies very easily; they do a lot of homework and due diligence before they invest.”
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