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ALLOVECTIN-7®

Allovectin-7® is a plasmid/lipid complex containing the DNA sequences encoding HLA-B7 and ß2 microglobulin, which together form a Class I Major Histocompatibility Complex, or MHC-I antigen. Injection of Allovectin-7® directly into tumor lesions, or intralesional injection, may augment the immune response to both local and metastatic tumors by one or more mechanisms. In HLA-B7 negative patients, a T-cell response may be initiated by the expression of a foreign HLA, similar to that observed in tissue transplant rejections. In HLA-B7 positive patients, enhanced HLA-B7 and ß2 microglobulin surface expression by transfected tumor cells could increase antigen presentation to tumor specific T-cells. In any patient, a pro-inflammatory anti-tumor response may occur following intralesional injection of the pDNA/lipid complex, as demonstrated in preclinical animal tumor models.

In 2001, we began a high-dose, 2 mg, Phase 2 trial evaluating the Allovectin-7® immunotherapeutic alone for patients with Stage III or IV metastatic melanoma, who have few other treatment options. Our high-dose Phase 2 trial completed enrollment in 2003. During the third quarter of 2004, we completed our data collection and locked the database for the high-dose Phase 2 Allovectin-7® trial. We presented data from the high-dose study in November 2004 at the annual meeting of the International Society for Biological Therapy of Cancer.

Based on detailed guidance received from the FDA in End-of-Phase 2 meetings, we successfully completed a Special Protocol Assessment, or SPA, with the FDA for a Phase 3 trial of high-dose, 2 mg, Allovectin-7® for certain patients with metastatic melanoma. The SPA specifies the trial objectives and design, clinical endpoints, and planned analyses expected to be needed for product approval. The Phase 3 trial began in January 2007.

In May 2006, Vical and AnGes entered into a collaborative agreement for Vical's Allovectin-7® cancer immunotherapeutic. Under the agreement, AnGes will provide up to $100 million in ongoing clinical trial funding and future sales-based milestones as Allovectin-7® is successfully commercialized. Vical retains exclusive marketing rights for Allovectin-7® in the United States and the rest of the world outside of specified Asian countries, for which AnGes received exclusive rights.