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GenVec Inc. (NASDAQ: $GNVC)

GenVec Inc. (GNVC) is a clinical stage biopharmaceutical company developing gene-based therapeutic drugs and vaccines. Its lead product candidate, TNFerade biologic (TNFerade), is being developed for use in the treatment of cancer. Using GNVC’s core adenovector technology, TNFerade stimulates the production of tumor necrosis factor alpha (TNFa), a known anti-tumor protein, in cells of the tumor. In addition to its therapeutic product development programs, GNVC is working with collaborators to develop new applications for its technology through its vaccine development programs. The Company is developing a vaccine in animal health against foot-and-mouth disease and preventative vaccines for malaria, human immunodeficiency virus (HIV), respiratory syncytial virus, and Herpes Simplex Virus Type 2 (HSV-2).

The Company was founded in 1992 and is based in Gaithersburg, Maryland.

Source: Reuters.com, SEC Filings.

Financial Summary

Revenues for 2009 were $13.9 million, down 8% from $15.1 million in 2008 primarily due to decreased revenue associated with the Company’s agreement with the Department of Homeland Security (DHS) of $3.2 million. The lower revenue under the DHS agreement is a result of decreased work scope and effort in 2009 as compared to the 2008 period. The decreased revenue associated with the DHS agreement has been partially offset by increased revenue of $2.1 million under GNVC’s HIV program as compared to the comparable prior year period. The higher revenue under the HIV agreements is a result of increased work scope and effort in 2009 as compared to the 2008 period.

Operating expenses for 2009 decreased 24% to $31.9 million from $41.8 million in 2008. Research and development expenses decreased 27% to $24.7 million in 2009 from $33.8 million in 2008. The decrease is primarily due to lower costs related to the development of TNFerade including manufacturing and materials costs, patient and data management costs, professional service costs related to GNVC’s TNFerade pancreatic clinical trial, and decreased personnel costs. Research and development personnel costs includes a decrease of approximately $331,000 of stock-based compensation expense in 2009 as compared to the prior year, partially offset by an increase in severance expenses of approximately $193,000 in 2009 as compared to the prior year. Also contributing to the decreased costs, but to a lesser extent, are decreased pass-through costs associated with its funded programs, most notably pass-through costs associated with the FMD program.

General and administrative expenses decreased 10% to $7.2 million in 2009 from $8.0 million in 2008.

General and administrative expenses were lower in 2009 primarily due to lower professional service costs and employee costs, partially offset by higher depreciation costs. Administrative personnel costs includes severance expenses of approximately $103,000, an increase of approximately $21,000 as compared to 2008, and a decrease of approximately $90,000 of stock-based compensation expense in 2009 as compared to the prior year.

Fourth Quarter 2009 Results

For the fourth quarter ended December 31, 2009, GNVC reported a net loss of $4.3 million, or $0.04 per share, compared with a net loss of $6.4 million, or $0.07 per share, for the comparable prior year period. The Company reported revenues of $3.4 million in the fourth quarter of 2009 compared to $3.3 million for the same period in 2008. This increase was primarily due to increased efforts under its HIV vaccine development program and malaria vaccine program, offset by reduced revenue earned under its agreement with the DHS.

Research and development expenses decreased 33% in 2009 from $8.2 million in the fourth quarter of 2008 to $5.5 million in the fourth quarter of 2009 due mainly to reduced TNFerade manufacturing and clinical trial costs. General and administrative expenses in the fourth quarter of 2009 increased 35% to $2.1 million from $1.5 million in the comparable period in 2008 primarily due to higher personnel costs.

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast amongst three polled investment analysts. Against the GenVec Inc company.

The two analysts offering 12-month price targets for GNVC have a median target of 1.30, with a high estimate of 1.60 and a low estimate of 1.00. The median estimate represents an 80.81% increase from the last price of 0.719.

Source: www.ft.com

Consensus Estimates Analysis

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=GNVC.W

Investment Highlights

GNVC recently announced that encouraging clinical and preclinical malaria vaccine data were presented at the Keystone Symposium—Malaria: New Approaches to Understanding Host-Parasite Interactions taking place April 11–16, 2010, in Copper Mountain, Colorado. Safety, tolerability, immunogenicity and efficacy data from the phase 1/2a malaria trial using GNVC technology were presented. Data indicate malaria vaccines given to malaria-naïve adults were found to be safe and well-tolerated with minimal local or systemic reactions and no serious vaccine-related adverse reactions. Sterile protection, a complete absence of parasites in the blood, was seen in four out of 15 volunteers that had been inoculated with the vaccine and subsequently challenged with the malaria parasite.

This clinical trial is being conducted under sponsorship from the U.S. Army Medical Materiel Development Activity (USAMMDA) and with financial support from the U.S. Agency for International Development, the Congressionally Directed Peer Review Medical Program, and the Military Infectious Diseases Research Program.

TNFerade™ represents a novel approach to treating cancer in combination with radiation and/or chemotherapy by introducing tumor necrosis factor-alpha (TNF-alpha), a potent anti-cancer protein, directly into tumors. TNFerade has been evaluated for its potential use in indications such as pancreatic cancer, head and neck cancer, esophageal cancer and rectal cancer.

GNVC is also using its proprietary adenovector technology to develop vaccines for infectious diseases.

• Foot-and-mouth disease antiviral and vaccine program in collaboration with the U.S. Department of Agriculture/Agricultural Research Services (USDA-ARS) Worldwide HIV vaccine in collaboration with the National Institute of Allergy and Infectious Diseases (NIAID)
• Malaria vaccine in collaboration with U.S. Navy and PATH’s Malaria Vaccine Initiative
• RSV vaccine under an SBIR grant from the NIH
• HSV-2 under an SBIR grant from NIAID

Source: http://www.genvec.com/

Technical Analysis

Source: http://stockcharts.com

GNVC is below its 50-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

GNVC’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, GNVC is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

GNVC’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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