BST Trade Alert: February 19, 2013
February 19, 2013
Recommendation:
Buy Vical (NASDAQ: VICL) up to $3.85 per share.
About the Company:
Vical is a biotech we’ve traded before with good success. Last October, we had you close out a two-month trade in the stock for a quick 22% gain!
And it’s a good thing we did.
After you took your profits off the table, the stock proceeded to fall to a low of $2.61 in late December. By grabbing those gains, you avoided going deeply into the red on the trade.
But now, the stock’s moving higher again in a solid uptrend. And we think it’s a great time to re-establish a position in this fascinating biotech.
So, without further ado, let’s reacquaint ourselves with the company…
Vical is focused on developing vaccines for the treatment of infectious diseases, cardiovascular disease, and cancer.
The key to the company’s long-term success is their patented DNA delivery technology. This amazing, cutting-edge technology is the basis for each product in Vical’s pipeline.
Here’s how it works in a nutshell…
The central component is called plasmid DNA (pDNA), which are closed loops of DNA that encode any protein of interest. When injected into tissue, pDNA is taken up by cells which then produce the encoded protein. The protein in turn provokes the body’s immune system to attack a disease.
Like I said… Amazing!
In addition to cutting-edge technology, Vical also offers a large pipeline of products in development, multiple partnerships with larger drug firms, and a solid financial position.
Let’s look at the pipeline first…
For a small biotech, Vical’s independent drug development program is very impressive. It includes a revolutionary cancer vaccine in late-stage clinical testing and two vaccines for infectious diseases in preclinical studies.
This biotech is clearly no one-trick pony.
What’s more, through collaborations with Astellas and AnGes, Vical has three other products in mid- to late-stage testing. These partnerships are attractive to investors as they provide for lucrative milestone and royalty payments for years to come.
Finally, the company’s financial position is just as impressive as their pipeline.Vical’s sitting on a mountain of cash… over $80 million… with no long-term debt. And current assets outweigh current liabilities by nearly 15 to 1.
This is one biotech that should have no trouble funding their clinical program for several years.
Let’s take a closer look now at Vical’s leading product candidate.
About the Product:
The company’s most advanced product in clinical testing is Allovectin. It’s a novel vaccine with potential to treat cancers of the breast, prostate, head and neck, and skin.
The product’s lead indication is first-line treatment of Stage III and IV metastatic melanoma (skin cancer).
Vical believes Allovectin offers several advantages over current first-line therapies. In fact, they see the drug offering patients improved efficacy, a better safety profile, and simple outpatient administration.
How does it work?
As I said before, Allovectin treats cancer in a new and unique way. I won’t overwhelm you with all the scientific details… just know that Allovectin teaches the immune system to recognize and destroy tumor cells.
What’s more, the treatment can be administered at a doctor’s office on an outpatient basis. And no additional medications prior to or after the treatment are required.
Sounds great in theory… but how’s Allovectin working in practice?
As you might have guessed, it has performed well so far in clinical testing.
In a phase 2 study, nearly 12% of patients responded to treatment with Allovectin. And among those responders, the median survival time was an impressive 18.8 months.
According to Vical, “these data compare favorably against historical controls from other studies of metastatic melanoma.”
Furthermore, Allovectin’s safety profile was excellent. Not one Grade 3 or Grade 4 adverse event was reported.
Now, we’re waiting for top-line results from a recently completed phase 3 trial.
Approximately 390 patients with metastatic melanoma participated in the study. The primary endpoint is overall response rate. However, the study will also evaluate safety and tolerability as well as survival.
The results should be released in mid-2013.
About the Market for This Drug:
Metastatic Melanoma is a widespread disease. According to the American Cancer Society, approximately 76,250 new diagnoses and 9,180 deaths occur annually in the US.
And sadly, there are no consistently effective therapies for advanced cases of melanoma where the cancer has spread beyond its site of origin. Current treatments include a combination of chemotherapy, radiation therapy, and surgery.
In patients with advanced metastatic melanoma, the median survival typically ranges from 6 to 10 months.
Clearly, there is a pressing need for a safer and more effective treatment for metastatic melanoma.
And as you might expect…
The potential rewards for developing such a treatment are out of this world. Decision Resources projects the melanoma drug market will increase more than 7-fold from $210 million in 2010 to $1.5 billion in 2020.
Make no mistake, Vical is sitting on a potential blockbuster treatment.
About the Potential Catalyst:
Top-line results from the phase 3 trial of Allovectin in metastatic melanoma are expected by mid-2013.
About the Shares:
VICL is a great buy right now.
As I mentioned earlier, the stock is moving higher in a solid uptrend. Since hitting a low of $2.61 in late December, the shares have gained 33%.
And we think there’s more room for the stock to run.
The all important Allovectin phase 3 trial results are expected by the middle of this year. Given the huge market potential for the skin cancer drug, good trial results could easily send these shares soaring.
As such, we have a golden opportunity right now to pick up shares at a hefty discount.
Go ahead and grab your shares of VICL today. We’ll be perfectly positioned to rake in huge gains on any rally leading up to, or on the release of, Allovectin’s pivotal phase 3 trial results.
Key Facts:
| Company: | Vical |
| Ticker: | VICL |
| Recent Price: | $3.48 |
| Market Cap: | $300 million |
| Avg. Daily Volume: | 73,148 shares |
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Category: BST Trade Alert
