Vical (VICL) is rallying today (+30%) after announcing some positive news from the FDA for its investigational antifungal VL-2397. Since you're probably not familiar with Vical, a little background would help. Vical develops biopharmaceuticals for the prevention and treatment of infectious diseases, based on its patented DNA delivery technologies.
VL-2397 is Vical's novel antifungal compound that was licensed from Astellas Pharma in 2015. VL-2397 was isolated from a leaf litter fungus collected in a Malaysian national park and represents the first agent in a potentially new class of antifungal drugs. The FDA has granted Vical Qualified Infectious Disease Product (QIDP), Orphan Drug and Fast Track designations for VL-2397 in the treatment of invasive aspergillosis.
Invasive aspergillosis is a life-threatening infection that typically affects immunocompromised patients, including those with acute leukemia and recipients of allogeneic HCT or lung transplants. Infection typically starts in the lungs and rapidly disseminates to other tissues. More than 200,000 cases of IA are diagnosed annually worldwide.
Turning to last night's news, the FDA has advised that Vical's investigational antifungal VL-2397 would be eligible for a Limited Use Indication (LUI) approval assuming a successful outcome of a single Phase 2 trial carried out in accordance with a protocol and statistical analysis plan consistent with the FDA's advice. The final determination whether the drug is approvable will be made by FDA after review of all relevant data.
The LUI is a provision of the Limited Population Pathway (LPP) established under the 21st Century Cures Act of 2016. Vical plans to initiate a single Phase 2 trial for the treatment of invasive aspergillosis (IA) in acute leukemia patients and allogeneic hematopoietic cell transplant (HCT) recipients in 4Q17.
The LPP will allow Vical to develop and commercialize VL-2397 on a potentially accelerated basis for a limited use indication. The global Phase 2 trial will be a non-inferiority study comparing VL-2397 to standard of care treatment for IA. Approximately 200 acute leukemia patients and recipients of allogeneic HCT will be enrolled and randomized 2:1.
The LPP is designed to streamline development programs for certain antimicrobial agents intended to treat specific groups of patients who are not well addressed by available therapies. Under this pathway, the drug can be used to treat only the limited population for which it is approved while additional trials are conducted to establish safety and effectiveness for broader indications. In the case of VL-2397, the limited population approval would be for patients for whom alternative regimens are not available to treat their invasive aspergillosis. A Phase 3 trial would be required to support full approval of VL-2397 for the treatment of IA in a broader population.
In sum, investors are clearly happy to see this news. It's not a final approval, but saying that VL-2397 would be eligible for a Limited Use Indication approval assuming a successful Phase 2 trial is an important milestone. After trading in a narrow range of $2.00-2.75 for much of the past year, this news has caused the stock to break above this range to a new 52-week high. With that said, most stocks that trade under $5 are speculative, so use caution here.