FDA Gives Green Light to Vical's Abridged Commercialization Pathway of Antifungal

The words "approval" and "FDA" together in a headline nearly always gets traders' attention and this was the case Tuesday morning for Vical Inc. (NASDAQ:VICL), with optimistic news about VL-2397, an experimental antifungal that Vical licensed from Astellas Pharma in 2015.

Discovered by isolating the compound from a leaf litter fungus in a Malaysian national park, VL-2397 represents the first in what Vical hopes will develop into a new class of antifungal drugs.

Vical is developing VL-2397 under Qualified Infectious Disease Product and Fast Track designations from the U.S. Food and Drug Administration for treating invasive aspergillosis, a difficult to treat infection that usually presents in people with underlying illness, but an otherwise healthy immune system.

On Tuesday, Vical said that the FDA agreed that VL-2397 would be eligible for a Limited Use Indication approval after only one mid-stage clinical trial, provided the study is carried out under certain parameters to demonstrate certain relevant data for the agency to review.

A Limited Use Indication is designed to get new drugs expeditiously to patient populations in great need, particularly those that aren't responding to treatments already on the market.

Vical intends to initiate a phase 2 trial of VL-2397 for invasive aspergillosis, of IA for short, in acute leukemia patients and allogeneic hematopoietic cell transplant recipients, two patient populations at high risk for IA, before the end of the year. The study is expected to enroll about 200 patients globally with the main goal of showing non-inferiority of VL-2397 compared to standard of care.

Officially, FDA approval of VL-2397 will hinge on the study safely meeting both the primary objective of all-cause mortality (ACM) at four weeks and the key secondary endpoint of ACM at six weeks.

Markets love the idea of a drug potentially getting to market and that has catalyzed shares of VICL from Monday's close at $2.56. The stock gapped ahead to open at $3.60 and climbed as high as $3.70 before falling all the way back to $3.00 around 2:00 p.m. Eastern, although still representing a gain of 17.2% on the day.