Washington Editor

Merck & Co. Inc. obtained an option license for rights to Vical Inc.'s DNA delivery technology for three cancer targets. In exchange, Merck returned technology rights in certain infectious disease indications to Vical.

"It was a marriage of convenience, where they wanted something and we wanted something," said Vijay Samant, president and CEO of San Diego-based Vical, describing the deal financially as a swap. "They only got an option, so when they exercise each of those cancer antigens, they will have to pay us for exercising the option plus the usual milestones."

Merck and Vical have been partners for more than a decade, beginning in 1991 when Merck, of Whitehouse Station, N.J., signed on to use the smaller company's gene technology to develop vaccines for human infectious diseases. (See BioWorld Today, June 12, 1991.)

"We have retained rights to Vical's technology in areas that we feel are valuable for our research," Janet Skidmore, a Merck spokeswoman, told BioWorld Today.

Samant told BioWorld Today that, over the years, Merck has paid Vical about $25 million in milestones and other payments.

The companies signed two deals within two months of each other in the fall of 1997. The first, valued at $35 million plus royalties, gave Merck the right to use Vical's technology to deliver genes encoding a small number of growth factors. The other, valued at $23 million plus royalties, was aimed at developing and marketing therapeutic vaccines against HIV and the hepatitis B virus. (See BioWorld Today, Nov. 6, 1997, and Sept. 16, 1997.)

Merck retains rights to use the technology for HIV, hepatitis C and hepatitis B, while returning rights for influenza, herpes simplex virus and human papillomavirus. Samant said Vical sought the return on the belief that it could find partnerships for those indications.

Vical's nonviral DNA delivery technology typically involves designing and constructing closed loops of DNA called plasmids, which contain a DNA segment encoding the protein of interest, as well as short segments of DNA that control protein expression, the company said.

Samant praised Merck, saying the big pharma company was the first to license Vical's technology in the early 1990s, "when it was very embryonic in terms of its ability, compared to what it is able to do today."

"Merck, along with us, over the years has done a number of things [for the technology], like improving formulations validating the technology in animal models; establishing safety animal models, meaning mice and rabbits; and clearly establishing that this is a technology that is nonintegrating, extremely safe and has unique applications in both the field of infectious diseases and cancer," he said.

While the decade-old relationship between Merck and Vical has yet to produce a blockbuster, Samant said the technology plus Merck's work has influenced six large HIV studies currently under way in various parts of the world.