Each week, Motley Fool editors cull a top stock idea from the pitches made on CAPS, The Motley Fool's 170,000-member free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words. Want to follow our weekly picks? Subscribe to our RSS feed or follow us on Twitter.
Vical (Nasdaq: VICL )
|Stock Price at Recommendation:||$4.32|
|Headquarters||San Diego, Calif.|
|Market Cap||$311 million|
|Industry Peers||CEL-SCI (AMEX: CVM )
Oncolytics Biotech (Nasdaq: ONCY )
GlaxoSmithKline (NYSE: GSK )
Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.
I won't get too deeply into statistical analysis of Allovectin phase 2 data and the phase 3 performance of comparators. The reason for that is people will never see eye to eye regarding the utility of comparing survival in single-arm trials to historical data. I personally don't feel the comparison is valid, but if you do believe in it then the Allovectin phase 2 data looks pretty good.
The real reason behind my red thumb here is the high rate of failure of phase 3 trials of immunotherapeutics, and the high rate of failure in phase 3 trials in melanoma. Yes, there are just enough candidates that squeak by, such as [Dendreon's (Nasdaq: DNDN ) ] Provenge and [Bristol-Myers Squibb's (NYSE: BMY ) ] Yervoy to keep life interesting. But the historical odds against Allovectin are high.
The timing of phase 3 data release has been pushed back indefinitely because of a lower-than-expected death rate in the trial. I've seen this same issue touted as a guarantee of trial success in many other cases, only for those hopes to be squashed when the real reason turned out to be better-than-expected comparator numbers. I'm expecting the phase 3 trial to reveal no statistically significant survival benefit of Allovectin, attributed to survival with dacarbazine better than historical performance. 24-week response rates could be higher with Allovectin, but without the survival benefit that has been shown with Yervoy and Roche's (OTC BB: RHHBY.PK) vemurafenib the drug is likely dead in the water commercially.