Vical shares decimated (again) after herpes vaccine flunks a PhI/II trial

A couple of years ago, as Vical struggled to overcome a Phase III flop for its cancer vaccine, the biotech said it would hustle ahead with a Phase I/II study of a herpes vaccine as part of its strategy to calm jittery investors. But after the markets closed Monday, the San Diego-based company ($VICL) was forced to concede that their herpes strategy had misfired as well, with their vaccine failing to perform as well as a placebo.

Investors swiftly followed up with another ritual slaughter of the biotech's stock, which plunged into penny stock territory after losing 45% of its value in a matter of minutes.

Neither the biotech's monovalent or bivalent vaccine hit the primary endpoint in the study: significantly reducing viral shedding of HSV. But the biotech did claim a secondary endpoint success for a reduction in the rate of genital lesions for the bivalent version, which uses its adjuvant Vaxfectin.

"We just received the top-line study data and we are disappointed that the vaccines did not meet the primary endpoint," said Vical CEO Vijay Samant. "The trial is ongoing and all patients are being followed for safety for 12 months and efficacy for 9 months after their final vaccine dose. During that 9-month period, we will collect additional clinical efficacy data including recurrence rate and lesion rate, which will enable us to determine the appropriate next steps for this program."

In the meantime, the company wanted to make it clear that all is not lost. Samant pointed to a late-stage program underway at Astellas for their partnered CMV vaccine as well as plans for a Phase I trial of an in-licensed antifungal compound. Astellas is on the hook for the CMV work, and Vical says it has enough cash on hand to soldier ahead into 2017, hoping for better news.

- here's the release