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2008 Interview with: Vical Incorporated (VICL-NASDAQ), President and CEO, Vijay B. Samant - featuring: their vaccines and immunotherapies based on its unique non-viral DNA technology for the prevention or treatment of infectious diseases, cancer, and cardiovascular diseases. |
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Vical Incorporated |
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With Two Programs In Phase 3 Studies For
PAD Patients, Another In Phase 3 For Melanoma, And Multiple Programs
Advancing For Infectious Diseases, Vical’s DNA Vaccine Technology Has
Arrived
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. Mr. Samant: “Vical has had a very exciting journey of progress over the last 12 months. Specifically, one of the most important things that happened was that our partner in Japan, AnGes, while doing a Phase 3 study, actually stopped the study at 40 patients. It was a 120 patient study, but they decided to stop the trial at 40 patients because the results were good enough that the Data Management Safety Board told them that it would be unfair to deprive patients who are on the placebo from this treatment. This treatment is for angiogenesis; a process by which you grow new blood vessels. They give a couple of injections to fight a blockage in the legs where that blockage is bypassed by growth of collateral blood vessels. The study was done mainly on diabetics and people who have the disease known as PAD, which can cause ulcers due to lack of blood circulation. These ulcers eventually grow to a size that leads to amputation. This particular product candidate allows the growth of new blood vessels. So, you get blood circulation and you help heal ulcers. The healing of ulcers eliminates the need for amputation. It’s a pretty revolutionary treatment and the company met its endpoint with 40 patients and achieved statistical significance. In March of this year, AnGes filed for approval. If that product gets approved in Japan, it will be the first gene therapy product approved in a developed country. The major breakthrough for our technology is how well it has progressed with our Japanese partner so far.”
CEOCFO: The fact that they stopped the study because of fairness was quite a testament. Mr. Samant: “The other important thing is this condition known as PAD (Peripheral Artery Disease), impacts about 10 million people in the US. The way PAD manifests itself is initially when you start walking, you get a pain in your leg and when you sit down the pain goes away. Later on, as the disease progresses, you get pain when you are actually sitting down. Eventually if you are diabetic, it leads to ulcers, and then can result in amputation. The other aspect is cost of amputations, because the healthcare burden in the US alone is about $10 billion. It’s a pretty expensive disease. As we are all getting older, this is going to be a serious disease in America. The same applies in Europe and elsewhere, because of our eating habits. Therefore, that is a very exciting program. Our other partner who is working in the same field but is using a different gene to grow blood vessels is Sanofi, which is a big pharmaceutical multinational company. They are doing a pivotal Phase 3 study for the same indication in the US and Europe. If that gets approved, that is going to be another opportunity for us. The way they have positioned this program is they expect to file for approval in 2010. That’s what they have said.”
CEOCFO: Vijay, you have got two companies working in a similar field; aren’t they going to compete with each other? Mr. Samant: “No, they are not going to compete with each other, because the gene sequences that both the companies are using, are different. Therefore, the mechanism of growing blood vessels is different. In reality, it is not like Zocor or Lipitor, where if you take one you don’t take the other. This actually may be an opportunity to use this, so you grow blood vessels by one mechanism and then you grow blood vessels by another mechanism. It allows you to even expand the market, without cannibalizing each other. We are pretty excited about how both of these programs are progressing.”
CEOCFO: Could they work synergistically? Mr. Samant: “That’s right; they could work synergistically. The other thing is they have been applied right now in clinical trials for patients who are in dire straits. These are patients who are at a very late stage of the disease. For example, if I go to my doctor and say, ‘Doctor you know I am a jogger in the morning but these days every time I jog, I get pain in my right leg. When I sit down, it goes away’. The doctor looks at me and says, ‘Well you have got a little bit of PAD. Let me take an ultrasound device and find out where the blockages are. Why don’t you come in next week and let’s give you this injection.’ In this case, there is an opportunity for using it in earlier stage patients. The application is huge, for this particular disease.”
CEOCFO: You mentioned approval overseas; what about in the US? Mr. Samant: “Our Japanese partner is applying for approval in Japan and they intend to start a study in the US some time next year. It will also be a pivotal study and Sanofi, which is the French company that is doing a pivotal study in the US and Europe would go for approval in the US and Europe.”
CEOCFO: Tell us a little bit about your relationship with your partners; are they going to be taking this to market, will you have a hand in that and what is your revenue source from this? Mr. Samant: “Excellent question. I think that the first thing is that both of our partners are spending the entire funding required to develop these programs. They are responsible for developing this program and they are responsible for commercializing this program. We in return will receive mid-single digit royalties and milestones. So, we don’t have to do anything with it. They are a pure licensee. They are using our technology to deliver these gene sequences. It’s a cost neutral impact on us, but definitely a positive revenue impact on us, because these could be pretty big markets. Therefore, the revenue streams could be pretty substantial.”
CEOCFO: Are you currently receiving milestone payments? Mr. Samant: “Yes, we have received to date and we should receive some more, as they progress in their development program.”
CEOCFO: That’s really exciting. What about side effects? Mr. Samant: “From a safety perspective, from the data that the Japanese presented, the drug is well tolerated. You are asking a very important question. We are developing a product which grows blood vessels, so you need to make sure that those blood vessels grow only locally. Not elsewhere. So far, the uniqueness of our technology has been that it has the ability to express growth factor proteins locally for a limited period of time, and our partner has not seen any safety issues so far. The proof of the pudding is that they applied for approval in Japan. It will go through a very critical review with the Japanese regulatory authority, which is very stringent. If it gets approved then they have obviously looked at all the safety aspects. So, I can sit here and tell you the drug is safe, but the ultimate answer to that question is approval in Japan.”
CEOCFO: We are talking about DNA technology. Mr. Samant: “Correct, it s a ring of DNA; a plasmid DNA, our basic technology.”
CEOCFO: Could you give us a simple explanation of how DNA technologies work? Mr. Samant: “With DNA technology, basically the concept is a ring of DNA in which you put a gene, which is basically a recipe. When you inject that ring of DNA into the muscle cell, the cell takes that ring of DNA and the ring enters the nucleus of the muscle cell, which is the protein factory of the cell. It then takes the gene sequence or the recipe and makes whatever is coded in that gene sequence. If it is a protein to promote the growth of blood vessels, it expresses that. If it’s the outer jacket of influenza to teach the immune system to recognize influenza, it expresses that. It has the versatile ability to make any protein, using the body’s own protein factory.”
CEOCFO: So you are not working with something that is life threatening in itself such as a germ or a virus. Mr. Samant: “We are not working with a germ. All we do is we download the recipe or the gene sequence from the computer.”
CEOCFO: You have some other technologies in clinical trials; would you tell us about them? Mr. Samant: “We have a very important program in melanoma known as Allovectin-7®. It is in a pivotal efficacy trial, including patients in US and Europe. One of the most important things in melanoma is, nothing has been approved for almost the last 20 years now. Therefore, what we have is a frontline therapy and there are only two frontline therapy drugs approved by the FDA. One is immunotherapy and one is chemotherapy. Both of them are very toxic and have a lot of safety issues and barely help patients.
CEOCFO: So these are human trials that you are doing. Mr. Samant: “Yes, these are human trials. Right now, we are doing a Phase 3 study and the end point of the study is not survival, it is response rate. Response rate is how well your tumor is shrinking. The end point in other Phase 3 studies has always been survival because, survival is really the gold standard. In our case, based on our early Phase 2 study, we believe that we demonstrated to the FDA that response rate is a surrogate marker for survival. That’s the reason we are doing this study. It is a pretty small study compared to what our peers are doing, which are 600 or 700 patient studies. This is a 375 patient study. Therefore, we are pretty excited and our goal is to get this study fully recruited by the middle of 2009. It’s again, another unique application of our technology.”
CEOCFO: I’ve seen that you have programs for pandemic influenza. Mr. Samant: “Pandemic influenza is a deadly disease, and nobody knows when it’s going to arrive. We also don’t know which version of pandemic influenza is going to arrive. So the solution is a vaccine that can be made very rapidly, very quickly. That’s where we come in. because our vaccine does not require the handling of the pathogen and it can be made in about six to eight weeks. We showed in humans that our vaccine is very immunogenic with immune responses in the range of 50 to 67%. That may not sound like high numbers, but let me tell you right now the government is stockpiling a vaccine which has showed an immune response of only about 44% and that’s made by conventional methods.”
CEOCFO: How will your technology affect health care costs? Mr. Samant: “Most of the vaccines currently are made by cell culture processes using complex cell lines that require very high capital investment. Our plasmids are made by very simple fermentation and simple purification steps. So inherently, the nature of the manufacturing processes is amenable to scale-up cost reduction. This means if you make it on a larger scale, can you reduce the cost substantially. Some of the processes, cell culture for example, are not amenable to cost reduction if you increase the scale. What you do is, instead of increasing the scale, you create multiple units to produce multiple manufacturing factories to produce larger throughput. For example, if you have a factory that’s producing 10,000 doses, then you replicate the process in multiple factories. So that doesn’t reduce your costs. In our case, we increase the size of the fermenters so the whole fixed overhead costs can be spread over a large number of units. Therefore, it is truly a scale-driven manufacturing technology. I think we can be competitive or even better, given the relatively lower capital intensity of our manufacturing equipment.
There is also the commercial side, since there are the two aspects of health care costs. This would relate to the patient hospitalization costs and all the health care delivery costs. One aspect is the drug cost and then there are things like amputation costs. The amputation healthcare burden in the US is $10 billion annually. If I can give a drug, which is going to reduce the amputations, then there is a massive reduction of the health care burden on both the payers and the payees. If I was to tell you that I am going to give you a drug in an outpatient setting for melanoma and you are going to go home, well that is a major change as opposed to taking a drug such as chemotherapy or immunotherapy that may lead to hospitalization. Therefore, besides being a lower manufacturing opportunity, theoretically this could also have a positive impact on the health care costs in general.”
CEOCFO: What about the financial position of the company currently; do you have the resources to continue the development process or will you have to go to the Street before these products reach the marketplace? Mr. Samant: “First of all, we are in a very sound financial position. We have only 40 million shares outstanding as we have managed our resources very effectively. We have practically no debt. We have no warrants. We have no personal or professional lawsuits against the company. This is a well-managed company. I would call it a company that is comparable to a large pharmaceutical company in terms of how we manage this company. Do we have to go back to the market? The answer is probably yes, but it will be driven by resource needs. It will not be driven just to raise money for the sake of raising money. We are able to demonstrate to the Street why we need the money and when we need the money. The Street as in the past will be happy to invest in us. We happened to raise money about two years ago, about $50 million, which we raised without any bankers. We did it by going to three major institutional investors. The government of Singapore is our largest shareholder right now.”
CEOCFO: In closing, what would you like to say to potential investors and what should they remember about Vical?
Mr. Samant:
“The DNA vaccines have arrived. This technology is now ready to explode into
a variety of applications. Keep an eye on where we are, right now. This is
something you need to watch very carefully. All right, ready for the ride.” |
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“We are developing a product which grows blood vessels, so you need to make sure that those blood vessels grow only locally. Not elsewhere. So far, the uniqueness of our technology has been that it has the ability to express growth factor proteins locally for a limited period of time, and our partner has not seen any safety issues so far. The proof of the pudding is that they applied for approval in Japan. It will go through a very critical review with the Japanese regulatory authority, which is very stringent. If it gets approved then they have obviously looked at all the safety aspects. So, I can sit here and tell you the drug is safe, but the ultimate answer to that question is approval in Japan.” - Vijay B. Samant |
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