Last Updated: 2009-05-07 14:00:34 -0400 (Reuters Health)
BANGALORE (Reuters) - Shares of Vical Inc surged 31 percent, after the biotechnology company said it was in pact with the U.S. Navy for the development of a vaccine against the H1N1 strain of influenza virus and posted a narrower quarterly loss.
On Wednesday, the company said the development program aims to advance a Vaxfectin-formulated H1N1 DNA vaccine into clinical testing as quickly as possible. [ID:nBNG448760]
Vaxfectin is the company's experimental influenza product. Vical did not disclose the terms of the agreement.
The deal will help Vical get partners for its influenza vaccine in its early-stage study, Rodman & Renshaw analyst Reni Benjamin said.
"(Vical) will clearly need more funding to develop this, going forward, but with the U.S. Navy willing to have a co-development deal with the company, chances are better in securing funding," Benjamin said.
If the vaccine is successful, it would translate into recurring revenue for the company through government contracts, the analyst said.
"It really depends on the government and how severe this (swine flu) scare is, whether this becomes a full blown pandemic. But if (the vaccine) is successful, then it could become part of the stockpiling effort."
However, Needham & Co analyst Alan Carr said it is too early for the company to say whether these recent events would help its strategy in the influenza area.
On Thursday, Vical posted a net loss of $8.2 million, or 20 cents per share, for the first quarter, compared with a net loss of $9.6 million, or 24 cents a share, a year ago.
Shares of the company touched a high of $2.75 before paring some gains to trade up 13 percent at $2.38 in morning trade, making them one of the top percentage gainers on Nasdaq.
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