3 Events Biotech Investors Need to Watch in 2013: Vical Incorporated (VICL) and More

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It's make-or-break time in 2013. That's the situation for several biotech companies with critical phase 3 trials under way. Good results from a late-stage clinical study can help an up-and-coming biotech hit the big time -- and help shareholders hit the jackpot.

On the other hand, less-than-stellar results can decimate a company's hopes and its stock. Celsion Corporation (NASDAQ:CLSN) experienced this agony of defeat recently when its ThermoDox failed to improve progression-free survival rates in liver cancer patients. Shares plummeted more than 80% on the news.

Vical Incorporated (NASDAQ:VICL)The fates of smaller biotech companies like Celsion, in particular, ride largely on phase 3 results. Biotech investors can win big if they make the right calls -- and lose big if they don't. With all of this in mind, here are three events in 2013 that biotech investors need to watch.

1. Could Allovectin be the next blockbuster cancer drug? Small biotech Vical Incorporated (NASDAQ:VICL) thinks that it might be on to something big with Allovectin. The company expects to announce results from a phase 3 study of the drug in treating metastatic melanoma in the middle of this year. Vical hopes that success with this trial will lead to application of Allovectin to other indications, including breast cancer, prostate cancer, and head and neck cancer.

Vical is quick to point out several advantages that Allovectin has over the currently available leading metastatic melanoma drug, Bristol Myers Squibb Co. (NYSE:BMY) 's Yervoy. Allovectin can be given in an outpatient setting with little post-administration monitoring; Yervoy must be administered via infusion with monitoring following the treatment. Vical also notes that no patients in its phase 2 study of Allovectin experienced severe adverse events that are sometimes encountered by patients who take Yervoy.

Melanoma could present a market potential of more than $500 million annually for Allovectin, according to Vical's estimates. That figure could be much higher with additional indications for the drug. Of course, Allovectin first needs to prove itself in the current late-stage study. We'll find out in a few months if Vical is truly on to something big.

2. Will this pancreatic cancer drug succeed? Merrimack Pharmaceuticals Inc (NASDAQ:MACK) probably faces one of the toughest challenges of any biotech. The company expects to conclude a phase 3 trial of experimental drug MM-398 as a second-line treatment for pancreatic cancer later this year.

Pancreatic cancer has few available treatments and is usually fatal. Amgen, Inc. (NASDAQ:AMGN) experienced first-hand how difficult it can be to succeed with a pancreatic cancer drug last August. The company halted its phase 3 and phase 2 studies of ganitumab after analysis found that improvement of survival rates was unlikely.

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