- The Washington Times - Monday, October 10, 2005

GenVec Inc. last week received a booster to its current HIV vaccine work with the federal government.

The Gaithersburg biopharmaceutical company won a $9.9 million contract from the National Institutes of Health (NIH) to provide additional work on a HIV vaccine the federal health research agency already is testing.

“This contract is for potential changes that might improve the current vaccine,” said GenVec President and Chief Executive Officer Paul Fischer.

The HIV vaccine is being tested by NIH’s Vaccine Research Center. The center is expected to start Phase II clinical trials, which generally use a larger patient group than earlier safety tests, in the near future, he said.

The recent contract is a boost for the “maturing” biotechnology company that has most of its treatments in the early or mid-stages of clinical trials, said Mark Monane, equity research managing director at New York investment bank Needham & Co. LLC.

“It’s 50 percent revenue and 50 percent validation for the company,” said Mr. Monane, who rates the stock a “buy.” Mr. Monane does not own any GenVec stock and Needham has no banking relationship with the company.

While GenVec faces the risk of creating costly drugs that might fail halfway through clinical testing, Mr. Monane said the company has spread out its treatments to include a “solid” product line.

“They have a core technology that makes sense to us and multiple products in development. And we think they are interesting for investors given their current [stock] valuation,” he said.

GenVec’s shares on the Nasdaq Stock Market closed yesterday at $2.06, up 2 cents from $2.04 Friday. The stock has been trading between $1 and $2 for the past six months.

Besides the HIV vaccine, GenVec is developing gene-based treatments for malaria, foot-and-mouth disease (sometimes called hoof-and-mouth disease), heart disease and cancer, Mr. Fischer said.

The company, with 110 employees and more than $25 million cash on hand, is considering a treatment for avian influenza, Mr. Fischer said, noting that the federal government recently has stepped up its spending on bird-flu vaccine development.

“We are assessing that possibility but we don’t have any program set up for it,” he said.

Analyst Navdeep Jaikaria said he was “impressed” by how GenVec has controlled its quarterly spending.

“GenVec is likely to have enough cash to last at least to the end of 2005,” said Mr. Jaikaria, with New York investment bank Rodman & Renshaw LLC.

Mr. Jaikaria, who rates the stock “market outperform,” does not own any GenVec stock and Rodman & Renshaw has no business with the company.

GenVec reported a loss of $3 million (5 cents per share) for its second quarter ended June 30, lower than the $4.8 million (9 cents) loss it reported in the comparable 2004 period.

Revenue in the quarter more than doubled to $7.3 million from $3.2 million a year ago.

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