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Vical Incorporated (VICL - Snapshot Report) recently suffered a major setback with its oncology candidate, Allovectin, failing to meet the primary endpoint in a phase III study.

Top-line results from the phase III trial showed that Allovectin failed to achieve a statistically significant improvement in objective response rate (primary endpoint) and overall survival (secondary endpoint) versus first line chemotherapy.

The study was conducted in metastatic melanoma patients.

Given the disappointing data, Vical has terminated its development program on Allovectin and instead will focus its resources on infectious disease vaccine programs along with cutting down expenses to conserve cash.

We note that Vical had cash and investments of approximately $66 million on Jun 30, 2013 which should roughly suffice operations through 2014 end.

Shares were down 57.26% on the trial failure news. The trial failure was disappointing as Allovectin was Vical’s most advanced pipeline candidate.

With Allovectin being terminated, focus will now shift to ASP0113, a therapeutic vaccine candidate currently in a multinational phase III registration study for controlling cytomegalovirus (CMV) in hematopoietic cell transplant (HCT) recipients.

We remind investors that ASP0113 is being developed in collaboration with Astellas Pharma (ALPMY).

Meanwhile, Vical is also planning to begin a phase I/II clinical trial on Vaxfectin, a therapeutic vaccine against herpes simplex virus type 2 (HSV-2) before the end of 2013.

Vical currently carries a Zacks Rank #4 (Sell). Right now, Gilead Sciences (GILD - Analyst Report) and Biogen Idec Inc. (BIIB - Analyst Report) look attractive with a Zacks Rank #1 (Buy).

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