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Vical
Incorporated – focused on developing infectious disease vaccines
Healthcare
Biotechnology & Drugs
(VICL – NASD)
Vical Incorporated
10390 Pacific Center Court
San Diego, CA 92121-4340
Phone: 858-646-1100
Vijay B. Samant
President and
Chief Executive Officer
Interview conducted by:
Diane Reynolds
Co Publisher
CEOCFOinterviews.com
May 2003
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. The company believes the following areas offer
the greatest potential:
· Niche
vaccines, for groups of people at high risk of infection with diseases for which there is
no adequate treatment or vaccine,
· Biodefense
vaccines, for diseases that may be used in bioterrorism or biowarfare,
· Universal
vaccines, for general pediatric or adult populations in which a challenge model or
accepted surrogate marker are available, and
· DNA vaccine
contract manufacturing, in which the company generates revenues by applying its expertise
and infrastructure.
For opportunities outside these areas, the company
plans to continue leveraging its patented technology through licensing and collaborations.
In addition, the company plans to use its expertise, infrastructure, and financial
strength to explore in-licensing or acquisition opportunities.
CEOCFOinterviews: Mr. Samant, please give us a little
background on Vical Incorporated.
Mr. Samant: “This is a unique company in the sense that
Vical Incorporated has a technology platform that has a variety of applications for drug
development. Our drug technology can be used for making vaccines, the treatment of cancer;
can be used for using therapeutic proteins. It is a breakthrough technology where
you basically take a plasmid, which is a DNA ring encoding a self-antigen or foreign
antigen, and have the muscle cell make whatever you’ve called for. For example,
if you were trying to develop a vaccine against an invading pathogen and the pathogen is
wearing a red tie, we would take the sequence for the red tie and make the red tie in the
muscle cells. Once the red tie is made in the muscle cells then the body’s immune
system develops an ability to recognize the red tie and when the actual pathogen enters
the body wearing the red tie then the body’s immune system is prepared to defend
against it. The trick here is to make sure that you pick the right garment, if the
pathogen keeps on changing the color of its tie then you will be fooled, so you want to
make sure that you choose a garment the pathogen is always wearing.”
CEOCFOinterviews: Are
you doing this in humans?
Mr. Samant: “That is correct! We just recently announced
a program for anthrax, where our technology allows the body to train in advance of an
infection to protect against anthrax. The current vaccine against Anthrax is not well
tolerated, requires six injections and there are many side effects. Our goal is to
accomplish the task in two to three injections and improve the safety of the vaccine. In
addition, our goal is to offer protection against multiple strains of anthrax; for
example, if someone were to change the current strain of anthrax in a bio-terrorism mode
the current vaccine may not work.”
CEOCFOinterviews: Have
you started clinical studies?
Mr. Samant: “Our anthrax vaccine is in pre-clinical
stage. We actually ran some very comprehensive tests in rabbits where the rabbits were
given the vaccine and we subjected the rabbits to an inhalation challenge with real
anthrax and all of the rabbits survived and the control rabbits who were not given the
vaccine all died. Therefore, we have been able to show that this vaccine protects rabbits
from anthrax. As you know, the pre-clinical stage for an anthrax vaccine is very important
because you can never run a full blown clinical program like you would run for a normal
disease. The clinical trials would have to give one group of patients the vaccine and
another group a placebo, and then infect them with anthrax. That is not ethical and it is
not practical. Our approval would be based on the Two-Animal Rule and the pre-clinical
data is very important under the Two-Animal Rule for approval of the vaccine. So,
for a product like our anthrax vaccine, it is very important to have good pre-clinical
data.”
CEOCFOinterviews: Are
all of your products in the developmental stages?
Mr. Samant: “All of our infectious disease vaccine
products are in the research phases with a goal of commercialization. We have a Phase II
program for melanoma using a vaccine called Allovectin-7â and we should have
data on this trial in time for the ASCO meeting in May. We have a program for anthrax
where the human clinical trials are beginning this year. We also have a vaccine for CMV,
which is an important pathogen and we should be in human clinical trials by the end of
this year. These are our in-house programs.
We also have a number of developmental programs which are partnered with other companies;
for example, the leading HIV vaccine under development by Merck & Co. Inc. uses our
technology. We have important programs with Aventis Pharma and Corautus Genetics for
treatment of angiogenesis where you inject plasmid DNA to the heart muscle to promote
growth of blood vessels to avoid bypass operations. We also have a program with
Centocor, a division of Johnson & Johnson, for cancer vaccines, and a program with
Merial, which is the world’s leading animal health company, for animal health
vaccines. Just to use a few examples.”
CEOCFOinterviews: Do you
know where you are going with the veterinary area yet?
Mr. Samant: “That target cannot be disclosed as per our
agreement with our partner but those programs are advancing well and the beauty of those
programs is that the animal applications have a much faster timetable for approval than
for human applications. Animal health approval is validation for the technology. It
really provides the pre-clinical data for human trials. So, really there are two
advantages: you can have some commercial return and at the same time it is a
stepping-stone for human approval.”
CEOCFOinterviews: Where
is the largest part of your growth coming from today?
Mr. Samant: “The majority of the company’s focus is
in the field of infectious disease vaccines. Our technology is best suited for developing
vaccines for infectious diseases. In addition to our independent CMV and anthrax vaccine
programs, we are working with the U.S. government to develop a vaccine for Ebola which is
a potential bio-terrorism agent. We are working with the U.S. Navy to collaborate on
a program to develop a vaccine for malaria. That is a program which is funded by the U.S.
Navy. There are a number of collaborative programs.”
CEOCFOinterviews: How
vital are your partners to the growth of this company?
Mr. Samant: “Well, you know, everyone is in control of
his or her own destiny. Partners are good. Partners are like mentors, uncles to help you
out when you are in trouble. Partners are good to give you guidance and help you
validate your technology, provide money, but really you have to take the products into
commercialization. We must be a successful company by commercializing our own in-house
programs, and the partners add value through expansion and validation for technology and
royalties as products commercialize. Hence, Merck & Co. Inc. is important as a
partner in terms of milestone revenue in the short term, but in the long term, our
in-house programs are the key to our success. Just to give you an example how just
important these partners have been. We have collected about $60 million dollars in
milestone payments from the partners in the last seven years.”
CEOCFOinterviews: What
is the most important thing for people to understand when looking at your financial
statement?
Mr. Samant: “I think the most important things for
people who look at a biotech company’s financial statement are to understand how well
it is managing its expenses, how is the head count, how focused are their programs. I
think that we as a company have judicially managed our resources in terms of our clinical
spending; facility spending, capital spending and head count spending. What the investors
need to look at with our company is the management understands how to manage their
finances effectively without compromising the product development programs and we have
done a terrific job at that.”
CEOCFOinterviews: Will
you have the ability and finances to continue to grow? Someone looking at this
company will wonder if you are going to last.
Mr. Samant: “This is a question that should be answered
by all of the biotechnology companies. One of the reasons we would last is that we have a
very healthy cash balance, we ended the year with $112 million dollars in cash. Our net
cash burn rate last year was about $22 million dollars so that gives you an example of
what kind of reach we have. We have an excellent partnerships with a number of companies,
we have some of the best partners in the business, Merck & Co. Inc., Johnson &
Johnson, Merial, the U.S. Navy, the Vaccine Research Center (of the National Institutes of
Health) that stuck with us for six or seven years. We have a great management team and a
great focus, so this is not a company that is going to go out of business.
CEOCFOinterviews: Can you tell us about some of your other
revenue sources?
Mr. Samant: “One source of money is through our
partnership programs which generate milestone payments. A second source of money is
through our contract manufacturing activity. We are one of the world’s largest
manufacturers of DNA vaccines. We are a big supplier of DNA vaccines to the Vaccine
Research Center and the NIH (National Institutes of Health). We supplied the vaccine for
the International AIDS Vaccine Initiative, and for a number of leading academic
researchers who are conducting large clinical trials. That has provided revenue for
us for the last three or four years. Another source of revenue for us is grants from the
NIH. For example, we conducted our initial anthrax research under a STTR grant from the
NIH, and we have applied for a larger SBIR grant to support clinical development of our
anthrax program. So those are the three ways we obtain our cash and maintain our
liquidity.”
CEOCFOinterviews:
Someone looking at this company may think that you are going just day-by-day. Why did you
join Vical Incorporated?
Mr. Samant: “I believe in this technology. That is why I
came here. This is a very exciting technology with the potential to create a paradigm
shift in the field of vaccines for infectious diseases. Currently there are only four key
players who work in this field with infectious diseases vaccines: Merck & Co
Inc., GlaxoSmithKline, Aventis and Wyeth. These four companies have a close hold on the
vaccine business which is almost a two and a half to three billion dollar business. The
investment is very high, the technology is complex and the skill sets that are required
are extremely complicated. So you really need a lot of resources and the barrier of
entry into this business is very high. Our technology when it is validated and proven to
be successful can bring that barrier down to increase the number of vaccines that can be
made available to the public.”
CEOCFOinterviews: What
makes this company different?
Mr. Samant: “This company has experienced management,
with real product development experience. Members of my management team have taken
products from concept through approval by the FDA so the management team has expertise and
maturity in product development. The company has a broadly applicable platform technology,
a strong cash balance, good in-house programs, a great board of directors, a good
scientific advisory board and finally blue chip partners to work with. How many companies
can claim that they have all of these assets?”
CEOCFOinterviews: Where
is the majority of the manufacturing?
Mr. Samant: “We just moved into our new facility that is
expanding our manufacturing capacity. It will have a 500 liter fermentation train along
with a 200 liter train. We also have a small manufacturing facility in the area which is a
dedicated facility, so, actually, we have two locations right now.”
CEOCFOinterviews:
Outside the U.S., how are you addressing that area?
Mr. Samant: “Our basic focus outside the U.S. has been
in obtaining intellectual property and in developing partnerships with companies that are
global in scope. Merck, Aventis, and Johnson & Johnson are all multinational
corporations. When our independent development programs yield licensed products, then we
would likely use marketing partners to pursue opportunities outside of the United States,
initially in Europe or Canada.”
CEOCFOinterviews: Have
you been fully able to find qualified people to join your team?
Mr. Samant: “We are very successful in hiring. We hired
David Kaslow who was Head of Vaccine Research from Merck, who moved here from the east
coast. We hired Dr. Tom Evans, who was the Chief of Infectious Disease at the University
of California-Davis, and left his ten-year position to come here to head our clinical
research. We have. Alain P. Rolland Ph.D. who left his position in Valentis in Texas and
relocated here. It is important that people who you hire believe in this technology as
passionately as you and then things fall into place.”
CEOCFOinterviews: In
closing, what would you like to say to investors?
Mr. Samant: “I urge investors to look at the company,
its financial position, its management team, what they bring to the table, the board of
directors, the scientific advisory board. Also focus on our manufacturing assets. We are
one of the few companies that has a truly integrated manufacturing and regulatory
capability. We are poised to deliver to our investors what they expect from us and we make
sure we can do it.”
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