Why Vical Incorporated Shares Got Eviscerated

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotechnology company Vical Incorporated  plummeted 58% today after a Phase 3 trial of its cancer treatment Allovectin failed to meet its efficacy endpoints.

So what: Vical said that Allovectin had failed to significantly reduce the size of tumors or increase the survival rate of patients compared with first-line chemotherapy, forcing management to terminate the Allovectin program completely. Management will now focus on its infectious disease vaccine programs, but given the seemingly slow pace at which Vical's DNA-based gene delivery platform has advanced, Wall Street isn't exactly thrilled with the company's prospects going forward.

Now what: Expect the stock to remain pressured in the short term. "In the coming weeks, we will make the necessary changes to focus resources on our infectious disease vaccine programs and reduce expenses to conserve cash," said President and CEO Vijay Samant in a statement. So while the Vical remains far too speculative for average investors, today's massive pullback -- the stock is now off a whopping 70% from its 52-week high -- might be an attractive speculation for biotech-savvy contrarians.

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The article Why Vical Incorporated Shares Got Eviscerated originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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