Vijay%20B.%20Samant%20President%20and%20Chief%20Executive%20Officer

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Vijay B. SamantPresident and Chief Executive
Officer

• UBS Global Life Sciences Conference
• September 24, 2003

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Safe Harbor

• This presentation contains forward-looking
  statements that are subject to risks and
  uncertainties that could cause actual results to
  differ materially from those set forth in the
  forward-looking statements, including whether any
  product candidates will be shown to be safe and
  efficacious in clinical trials and the risks set
  forth in the companys filings with the
  Securities and Exchange Commission. Actual
  results may differ materially from those
  projected. These forward-looking statements
  represent the companys judgment as of the date
  of this presentation. The company disclaims,
  however, any intent or obligation to update these
  forward-looking statements.

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Vical Investment Highlights

• Vaccine company patented non-viral DNA delivery
  technology
• Broad product pipeline 3 independent, 7
  partnered programs
• Phase II product melanoma
• Infectious disease vaccine programs CMV, anthrax
• Key partnerships Merck, Merial, Aventis,
  Corautus Genetics, NIH
• Extensive vaccine expertise
• Strong cash position - 98 million

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Vicals Strategy

• Develop new vaccines using patented non-viral DNA
  delivery technology
• Focus in-house on infectious disease targets
• No current vaccine
• Obtain proof of efficacy in small trials
• Outlicense targets requiring major resources
• Advance Allovectin-7 lead cancer product
• Leverage vaccine manufacturing expertise

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Product Pipeline
PRECLINICAL
PHASE I
PHASE II
CMV
DNA Vaccine
Vical
ANTHRAX
DNA Vaccine
Vical
HIV Vaccine
AIDS
Merck
UNDISCLOSED
Animal Health
Merial
INFECTIOUS DISEASES
Malaria Vaccine
MALARIA
Vical / US Navy
WEST NILE
DNA Vaccine
Vical / VRC
EBOLA
DNA Vaccine
Vical / VRC
Allovectin-7
MELANOMA
Vical
VEGF-2
ANGIOGENESIS (CAD)
Corautus
OTHER
Growth Factor
ANGIOGENESIS (PAD)
Aventis Pharma
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Allovectin-7 for Melanoma

• Plasmid DNA containing two genes
• HLA-B7 and ?2-microglobulin
• Triggers rejection of tumor
• Restores immune recognition of tumors
• Formulated with DMRIE/DOPE
• Pro-inflammatory
• Stage III or IV melanoma
• Potential use for earlier-stage disease
• Potential application for other solid tumors

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Allovectin-7High-Dose Phase II Trial

• Multi-center, single arm study
• Completed enrollment of 127 high-dose patients
• Similar patient population to low-dose (10 µg)
  Phase II trial
• Dose escalation (up to 2000 µg)
• Multi-tumor injections (up to 5 lesions/patient)
• Interim results from March 2003
• First 91 high-dose patients
• Response rate 13
• Excellent safety and tolerability
• Encouraging survival

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Allovectin-7 Status

• Data maturing for high-dose trial
• 60 of first 91 patients still alive in March
• 11 of 12 responders still alive in July
• 7 of 12 responders disease had not progressed in
  July
• Median duration of response 6.4 months in July
• Continued excellent safety and tolerability
• lt2 of patients with Grade 3 adverse events
• Review mature data with FDA in 7-9 months

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Infectious Disease VaccineDevelopment Timelines

• Conventional vaccines Approval years
• Chicken pox vaccine Varivax 33 (1962-1995)
• HPV 14 (1992-2006)
• Rotavirus 15 (1992-2007)
• MMRV combination vaccines 18 (1989-2007)
• Pentavalent combination vaccines 12 (1991-2003)
  
• FluMist 27 (1976-2003)
• DNA vaccines Potential years saved
• Rapid synthesis/preclinical testing of
  vaccine 4-6
• Simpler process scale-up issues 3-5
• Streamlined bio-analytical testing plan 3-5
• No advantage in clinical timelines 0
• Integration of clinical/mfg. consistency
  lots 2-4
• Potential reduction in size of safety
  database 1-3
• Construction/startup of mfg. facilities 3-5

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NIH Vaccine Research CenterKey Partner in DNA
Vaccines

• Established production orders
• Ebola
• West Nile Virus
• HIV
• New large-scale manufacturing agreement
• Option for additional vaccine targets
• Investment in infrastructure

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CMV Vaccine Program

• About CMV
• Herpes virus infects 50-85 in the US by age 40
• High risk groups
• Current therapy inadequate
• NO vaccine available
• Advantages of Vicals vaccine
• Ability to harness antibody and T-cell responses
• Non-infective - a MUST for immunosuppressed
  patients
• Proof of efficacy in transplant patients
• Small clinical trials

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CMV Vaccine Strategy

• Tiered approach for clinical development
• Rapid advancement - transplant indication
• Substantial downstream commercial potential -
  universal indication
• Focus on transplant patients
• Trial Design
• Vaccinate donor to boost immunity
• 4 and 2 weeks prior to transplant
• Vaccinate recipient to provide further boost
• 4 - 6 weeks after transplant
• Monitor for signs of disease

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CMV Vaccine Status

• Expert advisory panel in place
• Development pathway defined
• Consensus with FDA
• IP freedom to operate
• Basic constructs defined and manufactured
• Preclinical trials started
• Phase I by year-end
• Proof of efficacy trial size defined
• Key clinical centers selected

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Anthrax Vaccine Program

• About anthrax
• Caused by toxins from spore-forming Bacillus
  anthracis
• Treated with antibiotics (i.e. Cipro)
• Vaccine is antibody-mediated
• Bivalent plasmid DNA vaccine
• Animal Rule opportunity for rapid approval
• Concept to clinic in 24 months

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Anthrax Vaccine Strategy

• Target effectiveness equivalent tolicensed
  vaccine
• Potential to improve cross-protection
• Reduced number of doses vs. licensed vaccine
• Shorter time to protection
• Manufacturing well-characterized product
• Stockpiling advantage due to stability

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Rabbit Challenge ResultsAnthrax Vaccine Program
Group Alive/ Challenged Letx Neut Titer (Range) Mortality Range (Days)
PA DNA - 3 injections 8/8 2,560-20,480 All Alive
PA DNA - 2 injections 8/8 640-1,280 All Alive
PA DNA - 3 injections DMRIE/DOPE 8/8 1,280-10,240 All Alive
PA LF DNA - 3 injections 8/8 2,560-5,120 All Alive
LF DNA - 3 injections 5/9 320-1,280 Days 4-7
AVA - 2 injections 4/4 640-2,560 All Alive
Vector Controls 0/5 0 Days 2-3
Naïve Rabbits 0/12 ND Days 2-4
All DNA vaccines formulated with Vaxfectin
except for one DMRIE/DOPE group. Anthrax Spore
Challenge Dose 50-250 LD50.
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Anthrax Vaccine Status

• Proof of concept completed in mice
• Challenge study completed in rabbits
• Demonstrated 100 protection
• Pre-IND meeting with FDA in December 2002
• Manufactured initial clinical vaccine supplies
• Phase I by year-end
• Government funding of development
• Agreement - approval based on Animal Rule

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External Collaborations

• Merck
• HIV, cancer
• 23 million received to date
• Merial
• Animal health vaccines
• 7 million received to date
• NIH
• Ebola, West Nile Virus, HIV
• 7 million in grants to date

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External Collaborations

• Aventis Pharma
• Angiogenesis - PAD
• 1.5 million received to date
• Corautus Genetics
• Angiogenesis - CAD
• Minority ownership
• U.S. Navy
• Malaria
• 5 million received to date

Nearly 40 million in revenues to date
from collaborations
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Financial Information

• (in millions, except per share data) 2Q03
  2Q02 1H03 1H02
• Revenues 0.6 2.4 1.5 4.0
• Expenses 8.1 8.4 16.2 16.1
• Write-down of investment 0.5 - 0.5 -
• Loss from operations (7.5) (6.0) (15.2) (12.2)
  
• Net investment income1 0.5 1.0 1.2 1.9
• Net loss (6.9) (5.0) (13.9) (10.2)
• Net loss per share (0.34) (0.25) (0.69)
  (0.51)
• Cash, cash equivalents and
• marketable securities 98
  123

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ManagementDepth of Vaccine Expertise

• Vijay Samant Merck
• President and CEO
• David Kaslow, M.D. Merck, NIH
• Chief Scientific Officer
• Alain Rolland, Pharm.D., Ph.D. Valentis,
  Ciba-Geigy
• Product Development
• Tom Evans, M.D. UC - Davis
• Clinical Development

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Milestones

• Launch CMV and anthrax vaccine development
  programs
• Manufacturing agreement with NIH
• Encouraging Allovectin-7 interim data at ASCO
• 5.7 million SBIR grant for anthrax vaccine
  program
• Extension of Merck agreement to cancer
• Multiple patent issuances - U.S. and Europe
• Presentations at scientific conferences
• ICAAC
• World Vaccine Congress
• Start Phase I study of anthrax vaccine (4Q03)
• Start Phase I study of CMV vaccine (4Q03)
• Startup of new manufacturing facility (1Q04)
• Full Allovectin-7 high-dose cohort data (2Q04)

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Vical Investment Summary

• Vaccine company patented non-viral DNA delivery
  technology
• Broad product pipeline 3 independent, 7
  partnered programs
• Phase II product melanoma
• Infectious disease vaccine programs CMV, anthrax
• Key partnerships Merck, Merial, Aventis,
  Corautus Genetics, NIH
• Extensive vaccine expertise
• Strong cash position - 98 million

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