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Vical Incorporated’s
DNA vaccine platform will allow development of safer vaccines faster and cheaper for
pathogens where there are no vaccines available
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
October 20, 2005
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's goal is to be an integrated biopharmaceutical company committed to the development
and commercialization of vaccines and immunotherapies based on its unique non-viral DNA
technology. Together with its licensees and collaborators, Vical is currently developing a
number of vaccine and therapeutic protein product candidates for the prevention or
treatment of infectious diseases, cancer, and cardiovascular diseases. Independent
development programs include vaccines for CMV as well as novel immunotherapeutics for
treatment of melanoma. Through collaborations with others, Vical leverages its
technologies for applications that may not be appropriate for independent product
development efforts. Collaborators include Merck, Sanofi, Merial (Merck/Sanofi animal
health joint venture), Aqua Health (Novartis), AnGes MG, Corautus Genetics, and the NIH.
In addition, Vical pursues contract manufacturing opportunities to leverage its
infrastructure and expertise in plasmid manufacturing, and to provide revenues that
contribute to its independent research and development efforts.
CEOCFO: Mr. Samant, how long have you been with Vical
Incorporated and what changes have taken place under your direction?
Mr. Samant: “I’ve been with Vical for about four
and a half years and before working at Vical I was at Merck & Co., Inc. (NYSE: MRK)
for twenty plus years. The last few years at Merck I actually ran their worldwide vaccine
business, so I am a vaccinologist by profession. What I’ve done after coming to Vical
is to help advance this unique and innovative technology platform and then focus it on
vaccines for treating primarily infectious diseases. That would include existing ones and
new emerging ones, as well as vaccines for cancer. I’ve done that in two ways: first,
I’ve hired people who know what vaccine development is all about. Vaccine development
is kind of a religion and you need to have people who have been through that experience to
be productive. So I’ve hired the best people on my staff—people who understand
vaccine development. I’m delighted to say that I really have a team that is probably
better than any of the vaccine development groups at the smaller biotech companies. We
believe we our development capabilities are on par with some of the bigger pharmaceutical
companies.
The second thing that we did besides hiring a good team is look at our unique technology
platform and consolidate all of our learning and gains as they related to the platform, by
employees of Vical, academia and other companies. Consolidating and implementing those
gains into our platform made it much more productive. Making a platform more productive
allows you to make sure that whatever you are going to advance into the clinic, the
probability of success increases. Therefore, hiring good people, strengthening the
platform and then taking the right commercial targets into the clinic is what we have
accomplished. You can superimpose on that the fact that we have done it with a large
amount of federal government funding, because being a biotech company doesn’t give us
the financial flexibility to do a lot of creative things. Our technology was perceived by
the U.S. government as a technology that can do some creative things in fighting emerging
pathogens such as anthrax, Ebola, SARS and others. This is important because a biotech
company has to be driven by shareholder value creation and the direction of shareholder
value creation is to bring products to the market quickly.”
CEOCFO: Can you explain vaccines that come from DNA; how they
are developed and the value of your core technology?
Mr. Samant: “Conventional vaccines are made by three
methods and the first method is known as the ‘killed methodology.’ What you do
is you take a bug, which is a bacteria or virus that causes a disease, and grow it outside
of the body in growth-promoting media. Once you have grown sufficient quantities you
actually kill it and once you kill it you make sure that the vaccine is indeed completely
killed, because if it is not completely killed you know what is going to happen. If you
inject it into the body, the person who is getting the vaccine is going to get the
disease. Therefore, you will need to ensure that it is completely killed and the same time
as you kill it, you need to make sure that the physical integrity of the killed pathogen
is maintained. You cannot kill the bug and then have its body disintegrate, because you
want to have a killed virus that can be recognized by the immune system, so that the
immune system can practice and come up with an immune response against the pathogen and
then create memory. This is so that when the live pathogen comes in, the immune memory can
create bullets and soldiers that are required to destroy the pathogen. So that’s the
‘killed vaccine’ methodology.
The second methodology is known as the ‘live attenuated’ methodology. In the
‘live attenuated’ methodology, you would take a pathogen and somehow reduce its
ability to infect you. One example would be to cut its legs or arms off; it is alive but
it can’t do any harm. You would then inject it into the body; teach the immune system
to create bullets and soldiers so that when the real pathogen comes, you can destroy the
pathogen. The problem with the ‘live attenuated’ vaccine is that there is no
defined method of developing a weakened or ‘live attenuated’ vaccine. It is a
trial and error method, because if it is too alive it can cause the disease. For example,
with HIV you can’t do a ‘live attenuated’ vaccine because if you do and 5%
of the people got the disease that would be a significant problem. The ‘live
attenuated’ vaccines are more of an art than a science and they take years to
develop; the average time line for developing a ‘live attenuated’ vaccine is 25
years. What attenuation means is that it is no longer of the same strength that it was
before. Killed vaccines take 15 to 20 years. When the long development times for these two
vaccine methodologies were limiting abilities to produce new vaccines, along comes
recombinant DNA technology. The recombinant DNA technology says, ‘Why expose the
immune system to the entire pathogen? Let’s just expose one unique feature of that
particular pathogen.’
To make an analogy, think of a pathogen as wearing clothes. Assume that one distinguishing
feature of a particular pathogen is that it always wear a particular shirt with stripes on
it, brown colored stripes. No matter what it does, the striped shirt is always on it. So
people said, ‘Let’s take that striped shirt and make that striped shirt
synthetically by recombinant DNA and inject it into the body.’ The body starts
recognizing the synthetic shirt and when the real pathogen comes in wearing the shirt, it
can be identified and destroyed. That is known as the recombinant protein technology and
that shortened the time for vaccine development from 25 to 30 years to 15 years.
We’ve taken it a step further. The recombinant protein technology has limitations
because you will need to identify the pathogen and make the synthetic portion of a
pathogen identical to the same portion of the real pathogen. If it were a shirt, it would
have to be copied to exact accuracy; you could not even have a single button different.
Our approach is to take a gene sequence from the pathogen, representing the instructions
for making the shirt, and put it in a DNA vaccine. We inject that DNA into a muscle cell.
The muscle cell takes up the DNA instructions for making the shirt, and then the
manufacturing equipment of the muscle cell starts producing exact copies of the
shirts.”
CEOCFO: What does the body then do with that synthetic shirt
or pathogen?
Mr. Samant: “It then presents the shirt to the immune
system in the same way it would be presented in a natural infection. What’s important
here is that we did two things: we used the body’s own machinery to manufacture the
shirt/pathogen, and then we gave very precise instructions to the body’s
manufacturing equipment to make the shirt/pathogen, so that there was no mistake. We can
do that quickly, because we don’t have to keep on learning how to make the
shirt/pathogen outside of the body. All we need is to understand the distinguishing
feature of a pathogen and the corresponding gene sequence, which is now mathematically,
genetically sequenced. So, in concept we are able to do a vaccine development program,
which conventionally took 5 to 7 years to go into the clinic and reduce that to 18 months.
We actually took the SARS vaccine into the clinic 18 months after the SARS bug was
identified and genotyped. So that’s the speed and beyond the speed, making these DNA
rings is a much simpler process, compared to a killed vaccine, which is a 9 to 18 month
manufacturing cycle. So you can make the stuff quickly, it is stable so that you can
transport it around the world easily and you can make quick changes if you have to make
changes in it.”
CEOCFO: Please tell us about its non-viral aspects.
Mr. Samant: “Our DNA vaccine is non-viral, because there
is nothing associated with the virus in it; all you are putting is a gene sequence and you
are not handling the pathogen. For example, if you are developing a vaccine against HIV,
you are not dealing with the HIV virus. All you need in your computer is the gene sequence
for HIV. So we’re not dealing with the bug and we don’t have to handle any bugs
in our laboratory.”
CEOCFO: How near term are you to bringing a vaccine to the
market?
Mr. Samant: “Our licensee Aqua Health Ltd. of Canada, an
affiliate of the Swiss-based company Novartis Animal Health, just got a proprietary
APEX-IHN DNA vaccine for protecting farm-raised salmon against infectious Haematopoietic
Necrosis Virus (HNV), approved by the Canadian Food Inspection Agency (CFIA). Another
licensee, Merial Ltd. (a joint venture between Merck & Co., Inc and Sanofi-Aventis),
which is the world’s largest animal health company, recently informed us that a
cancer vaccine for dogs based on our technology is expected to be approved in 2006. We
have a program with the federal government, the Vaccine Research Center of the National
Institutes of Health, which is working on vaccines for SARS, Ebola, HIV and the West Nile
virus. They are all in clinical trials with almost $40 million being spent on them by the
federal government. We have a program for the treatment of melanoma, which will enter
Phase 3 if everything goes well in partnering discussions. We also have a vaccine for CMV
or cytomegolovirus infection, where we are doing a trial with bone marrow transplant
patients. In addition, we are doing a treatment for melanoma using Interleukin-2. We are
doing this all using the same technology. We also have partnered programs with three
companies doing programs with angiogenesis to promote the growth of blood vessels for
people who have blockages in their legs or around their hearts. What we do is inject DNA
encoding a protein that promotes the growth of blood vessels and you get the growth of
blood vessels so that you can alleviate the blockage. We have three programs in this area,
including one in Phase 3 and two in Phase 2, so we have a huge number of collaborative
programs that are going on.”
CEOCFO: With regard to the cost of healthcare, is producing
DNA vaccines more or less expensive than conventional vaccines?
Mr. Samant: “I think DNA vaccines will be much cheaper
to produce. This is because the physical assets required to produce DNA vaccines are 1/20
of what is required to produce conventional vaccines. The cost of products at large volume
is comparable to current conventional vaccine technology. However, the safety profile of
DNA vaccines is outstanding. There are hardly any adverse events associated with this
technology, because there is nothing hazardous in it. There are no viral vectors, foreign
particles, killed viruses or live attenuated viruses being put in the body. The important
thing is that the form of DNA we use is very stable, so it has the potential to be stored
at room temperature for extended periods of time. Conventional vaccines require
refrigeration, and have a very short shelf life. With every attribute of our DNA vaccine
we have a very powerful and positive attribute and which is better than conventional
vaccines.”
CEOCFO: What type of cancer are you focusing on?
Mr. Samant: “We are working primarily on melanoma, a
very deadly form of skin cancer.”
CEOCFO: And Vical’s other focuses?
Mr. Samant: “Our other focuses are all on the infectious
diseases vaccines for diseases such as AIDS, SARS, Ebola, West Nile, anthrax and
influenza. They are all in clinical trials except for influenza, which is in
pre-clinical.”
CEOCFO: How do your programs breakdown with regard to the
number of partners that you are working with?
Mr. Samant: “We have 14 programs altogether and 10
programs are being fully funded by partners and 4 are being done by Vical. Even those 4
are partially funded by government grants.”
CEOCFO: Where do you envision Vical five years from now; will
you still be a developmental company or assembling a sales force?
Mr. Samant: “I think that five years down the road our
goal is to be a cash flow positive company, but I think that the important thing is we are
to be careful that we don’t go so fast that we lose our core values and lose our
development expertise. That is because our real expertise is in development and not
marketing. Therefore, we want to make sure that we have a fair balance of our own
commercialization with significant partnering with larger pharmaceutical companies. They
have larger resources to devote to commercialization of product, and really leverage our
technology with new innovative products; particularly in the field of infectious disease
vaccines. There is a huge need there, but not too many people working on it. That’s
because the whole area of vaccines is controlled by four large pharma companies, because
they have the resources, know how, technology that’s used in conventional vaccines,
which large companies have over the years developed, so small companies cannot go in that
area. A company of Vical’s size cannot develop a vaccine by conventional technology,
because we just don’t have the resources.”
CEOCFO: Where is most of your current spending and do you
have the money to continue to develop your vaccine developments or will you have to go out
and raise funds?
Mr. Samant: “The last quarter we ended with about $60
million in the bank, and we just raised another $20 million. Our burn rate has been in the
$20’s, so I think that we have sufficient cash in the near term. As our programs
expand, there may be need for additional cash and in that case, we would have to go back
to the market or to our partners to raise additional cash. However, the company has
sufficient cash to do what we need to for the next two-plus years without missing a
beat.”
CEOCFO: Do you have float available for interested investors?
Mr. Samant: “We have a large institutional holding and
although we do have retail holding, primarily our stock is held by institutional
shareholders. However, we would love to have more retail holding and hopefully with the
growing investor interest, the float should increase.”
CEOCFO: In closing, what should investors remember about
Vical Incorporated?
Mr. Samant: “Vical is a company with a great technology
platform, which has the ability to create a paradigm shift in the vaccine business. Our
technology will allow all of the health authorities around the world to develop vaccines
faster and cheaper, for pathogens where there are no vaccines available. The company has a
great management team and board and it is an ethically run company with a great value
system. We are a really focused on creating value for investors.”
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