Shares in biotechnology company VaxGen Inc. plunged 47% on Monday after the company revealed that its five-year, $100-million trial of an experimental AIDS vaccine didn't protect people from the virus.
The failure of the largest human trial yet for an AIDS vaccine throws VaxGen's future in question. The company, based in Brisbane, Calif., has no licensed products and only about seven months of cash remaining.
John McCamant, editor of the Medical Technology Stock Letter in Berkeley, said the odds of VaxGen's survival as an independent company "are very, very small."
VaxGen's management said Monday that its ability to tap investors for additional financing would depend largely on the results of a second, smaller AIDS vaccine trial that is winding up in Thailand. Results from that test are due later this year.
But investors Monday expressed impatience with VaxGen as the company's shares hit a 52-week low during the day at $3 before closing at $6.86 a share, down $6.16, on Nasdaq. In recent weeks, as much as 60% of the company's 14.5 million shares were controlled by short sellers, who were betting that the stock would fall.
Late Sunday, VaxGen confirmed that there was no meaningful difference in protection between the 3,300 participants who received its vaccine and the 1,700 patients who got a placebo in its much-anticipated test of the drug, AIDSVAX. Trial participants, mostly gay, white men in the United States, were chosen because they faced a risk of getting infected with the human immunodeficiency virus that causes AIDS.
"The disappointment comes from working in AIDS. This is no doubt a challenging little bug," VaxGen President Donald P. Francis said Monday.
Many scientists, including Caltech President David Baltimore, a winner of the Nobel Prize in medicine, had predicted that the vaccine would not work because it was too simply designed to fend off the highly mutable HIV.
VaxGen's management acknowledged that the vaccine was a high-risk project. But Francis, who decades ago was among the first to predict an AIDS epidemic when he worked at the national Centers for Disease Control and Prevention, said he would have been happy with a first-generation vaccine that worked 30% of the time. Vaccines against measles, pertussis and diphtheria are effective more than 90% of the time.
Still, VaxGen's vaccine did not even meet Francis' low expectations for it.
