Vical Inc. agreed to sell 2.5 million shares priced at $5.02 each in a registered direct offering to bring in $12.5 million for its ongoing development programs in cancer and infectious disease.

The San Diego-based firm expects proceeds to support work on four of its internal programs, including the lead product Allovectin-7, which is getting ready to begin Phase III testing in metastatic melanoma patients, as well as its interleukin-2 plus electroporation therapy for metastatic melanoma, and its products for cytomegalovirus and influenza, said Jill Church, vice president and chief financial officer at Vical.

In addition to those programs, "we are constantly doing research," she added.

The company, which posted a net loss of $3.2 million, or 11 cents per share, for the second quarter, had $60 million in cash as of June 30. It brought in $9.8 million through a direct offering of 2.1 million shares priced at $4.77 each to a single institutional investor in August.

Shares of Vical (NASDAQ:VICL) closed at $5.19 Monday, up 9 cents.

At this time, the company has not updated its financial guidance for the year, which anticipates a net loss for 2006 to fall in the range of $22 million to $26 million. That estimate excludes any stock options.

Vical's pipeline is based on its DNA delivery technologies. Earlier this year, the company partnered its most advanced product, a late-stage cancer immunotherapeutic, Allovectin-7, with Tokyo-based AnGes AG to help fund the planned Phase III trials. That deal grants AnGes exclusive Asian marketing rights in exchange for $22.6 million in cash and equity funding to Vical. If Allovectin-7 ultimately reaches the market, Vical would be entitled to up to an additional $77.5 million in sales-based milestones. (See BioWorld Today, May 31, 2006.)

The company's IL-2 therapy is in Phase I development for tumors. That study involves the direct injection into a tumor lesion of plasmid DNA encoding IL-2, followed by electroporation aimed at enhancing uptake of the pDNA into the tumor cells.

In February, Vical started enrolling patients in a Phase II trial of its CMV vaccine in donors and patients undergoing stem cell transplants. The vaccine received orphan designation for stem cell and solid-organ transplants, and that program has been helped by $4.1 million in funding from the National Institutes of Health.

Although in preclinical development, Vical's flu vaccine has garnered much attention for its potential cross-protective activity against several different flu strains. In May, the company's stock soared 30 percent to close at $7.19 after data showed that the flu vaccine, formulated with the company's Vaxfectin adjuvant, provided full protection in mice and ferrets challenged with a virulent strain of H5N1 avian flu virus. (See BioWorld Today, May 3, 2006.)

That vaccine is finishing up preclinical development, Church said.

Vical's Vaxfectin adjuvant, which is designed to boost the immune responses of the company's DNA vaccines, also has demonstrated early promise as an adjuvant with conventional flu vaccines. Preclinical data presented over the weekend at the Infectious Disease Society of America meeting in Toronto showed that the adjuvant boosted the immune response in mice given the Trivalent flu vaccine sold by Paris-based Sanofi-Pasteur, suggesting it might be used as a dose-sparing agent in combination with conventional vaccines against both seasonal and pandemic flu strains.

In other financings news:

• Advanced Biotherapy Inc., of Chicago, completed the sale of common stock to Richard Kiphart and other new investors for $5.4 million. That investment, plus the $1.1 million previously invested by Kiphart, completes the company's $6.5 million financing. The company, which focuses on anticytokine therapy, also reported the conversion of all convertible notes, except for a nominal amount paid in cash. Advanced Biotherapy said it has no long-term debt and has about $6.2 million in cash, as of Oct. 12, 2006.

• Inovio Biomedical Corp., of San Diego, closed the sale by Inovio Asia Pte. Ltd., a majority-owned subsidiary in the Republic of Singapore, comprising 2.2 million ordinary shares of Inovio Asia at $2.43 each, resulting in proceeds to the company of about $5.4 million. Those shares of Inovio Asia will be exchanged for shares of common stock and warrants to purchase 770,573 shares of common stock of Inovio Biomedical no later than three months from the closing date, and may be exchanged earlier upon the occurrence of certain events. Separately, Inovio Biomedical completed the sale of 4.1 million shares of stock to foreign institutional and accredited investors based primarily in Singapore, at $2.43 per share plus warrants to buy 1.4 million shares. That sale resulted in proceeds to Inovio Biomedical of about $9.9 million.