Vical announced its restructuring late Tuesday.
Following a failed Phase III vaccine for stem cell transplant recipients last week, San Diego-based Vical Incorporated is slashing 54 percent of its employees and focusing its remaining resources on two mid-stage candidates.
Vical announced its restructuring late Tuesday. In pre-market trading, shares are up slightly to $1.50.
The restructuring announcement is not all that surprising given the Phase III failure. Last week, Vical and its development partner Astellas Pharma revealed that ASP0113, an investigational DNA vaccine being developed for cytomegalovirus (CMV)-seropositive hematopoietic stem cell transplant (HSCT) recipients, did not meet primary endpoints. The companies said ASP0113 also failed to meet secondary endpoints as well. In its announcement on Tuesday, Vical said it is terminating all activities related to the ASP0113 program licensed to Japan-based Astellas Pharma.
Now the company will use its resources for the development of VL-2397, its antifungal drug product candidate which is entering a pivotal Phase 2 clinical trial in the first quarter of 2018. VL-2397 is being developed for the treatment of patients with invasive fungal infections. The company is also focused on the development of an HSV-2 therapeutic vaccine, VCL-HB01, to treat patients with symptomatic genital herpes infection. The company anticipates topline results from the Phase II trial in the second quarter of 2018.
With the termination of the ASP0113 program and the job cuts, Vical said it believes its currently available cash and investments will be adequate to fund operations at least through 2019. The job cuts leave Vical with 34 employees.
When Vical reports its final 2017 financial numbers, the company believes it will have ended the year with cash and investments of between $60 and $65 million. The company said the cash burn for 2017 is expected to be at the low end of Vical’s guidance of $8 to $11 million. It will provide a 2018 cash-burn guidance at its next financial results conference call. The layoffs are expected to cost Vical about $1.1 million, the company said.
Vijay Samant, Vical’s president and chief executive officer, said the decision was made after carefully evaluating the company and its priorities. Samant said the restructuring will extend the company’s cash runway to drive the development of the two mid-stage programs in order to maximize shareholder value.
“This has been a very difficult process and we regret the impact this business decision has on our departing employees. We greatly appreciate the hard work and commitment they have shown Vical over the years and wish them the very best in their future endeavors,” Samant said in a statement.
