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GenVec Inc. (NASDAQ: GNVC)

GenVec Inc. (GNVC), a clinical stage biopharmaceutical company, engages in the development of gene-based therapeutic drugs and vaccines. Its lead therapeutic candidate, TNFerade™, is currently in a pivotal, phase III clinical study (PACT) in locally advanced pancreatic cancer. In addition, TNFerade is currently being evaluated for its potential use in the treatment of several other cancers, including esophageal cancer, rectal cancer, and head and neck cancer. GNVC also uses its proprietary adenovector technology to develop vaccines for infectious diseases including HIV, malaria, foot-and-mouth disease, respiratory syncytial virus (RSV), and HSV-2. The Company has strategic alliances and research contracts with the U.S. Department of Homeland Security, the U.S. Department of Agriculture, PATH Malaria Vaccine Initiative (MVI), the U.S. Naval Medical Research Center, and the Vaccine Research Center of the National Institute of Allergy and Infectious Diseases of the National Institutes of Health.

GNVC was founded in 1992 and is based in Gaithersburg, Maryland.

Source: Reuters.com, SEC Filings, FY ending December

Financial Summary

For the second quarter ended June 30, 2009, GNVC reported a net loss of $4.8 million ($0.05 per share), versus a net loss of $6.6 million ($0.08 per share) in the comparable quarter of 2008. For the six months ended June 30, 2009, its net loss was $10.5 million ($0.12 per share), compared to a net loss of $12.8 million ($0.17 per share) for the six months ended June 30, 2008.

Revenues for the three-month and six-month periods ended June 30, 2009, were $3.8 million and $7.6 million, respectively, compared to revenues of $3.9 million and $7.6 million in the comparable prior year periods. Operating expenses were $8.6 million and $17.8 million for the three-month and six-month periods ended June 30, 2009, respectively, representing decreases of 20% and 14% as compared to $10.6 million and $20.8 million in the comparable prior year periods.

At the end the second quarter of 2009, the Company’s cash and investments totaled $12.6 million.

According to Douglas J. Swirsky, GNVC’s senior vice president and CFO, the Company expects revenues for 2009 will be between $15 million and $18 million, based on existing contracts and collaboration, and projects cash burn to be between $8 million and $11million for the 12 months ending June 30, 2010.

FINANCIAL STRENGTH

Source: Reuters.com

Analyst Consensus

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

This is the consensus forecast amongst 1 polled investment analysts.

Source: http://markets.ft.com/tearsheets/analysis.asp?s=GNVC:NMQ

Investment Highlights

Overview

GNVC engages in the development of novel, gene-based therapeutic drugs and vaccines. Its lead therapeutic product candidate, TNFerade biologic (TNFerade), is being developed for use in the treatment of cancer. In November 2008, TNFerade was granted Fast Track designation by the U.S. Food and Drug Administration (FDA) for its proposed use in the treatment of locally advanced pancreatic cancer. Fast Track designation can potentially expedite the regulatory review of TNFerade by the FDA.

In addition, TNFerade is being evaluated for possible use in the treatment of other types of cancer. Using the Company’s core adenovector technology, TNFerade stimulates the production of tumor necrosis factor alpha (TNF), a known anti-tumor protein, in cells of the tumor. According to previous studies, encouraging results have been seen in studies for esophageal cancer and head and neck cancer. An encouraging preliminary data also emerged from a trial in rectal cancer, and the program is currently under review. The Company’s melanoma program was suspended in order to dedicate resources to near-term indications.

The Company’s core technology has the important advantage of localizing protein delivery in the body. This is accomplished by using its adenovector platform to locally deliver genes to cells, which then direct production of the desired protein. In the case of TNFerade, for example, this approach reduces the side effects typically associated with systemic delivery of the TNF protein. For vaccines, the goal is to induce a broad immune response against a target protein or antigen. This is accomplished by using the adenovector to deliver a gene that causes production of antigen, which then stimulates the desired immune reaction by the body.

Recent News

On September 24, the Company announced it received the fourth-year funding from the National Institute of Allergy and Infectious Disease (NIAID), which is part of the $52 million, five-year contract for the production of HIV vaccines. For the fourth year, GNVC will reportedly receive up to $2.3 million, which will support the generation of HIV vaccine candidates with its alternate adenovirus serotype technology.

A month earlier, the Company also received an approximately $2.5 million grant from the same agency to support the development of its vector production technology. This important grant will support work to advance the Company’s cell line technology and enhance its ability to discover and develop new adenovector-based vaccines and therapeutics, according to Dr. Doug Brough, GNVC’s executive director of Vector Sciences.

The Company stated in its recent 10-Q filing that it will continue to look for government sponsored research collaborations and grants to help offset future anticipated losses from operations, as it expects to continue to rely on government funding for a significant portion of its revenues for the next few years and, to a lesser extent, interest income.

Early this month, Merriman Curhan Ford initiated coverage of the stock with a buy rating, saying that the Company’s “underlying technology for vaccine and gene delivery has established a promising long term pipeline for multiple therapeutic indications.”

NASDAQ Notice of Minimum Bid Price Non-Compliance

On September 16, the Company announced it was notified by The Nasdaq Stock Market that its common stock’s minimum bid price was below $1 per share for 30 consecutive business days and that the Company was therefore not in compliance with Marketplace Rule 5450(a)(5). According to GNVC, it intends to actively monitor the bid price for its common stock March 15, 2010, and will consider available options to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement.

U.S. Drug Market Opportunity

GNVC’s lead therapeutic product candidate, TNFerade biologic, is under phase III trial for first-line treatment of inoperable, locally advanced pancreatic cancer. Once approved, the Company will gain access to the U.S. pancreatic cancer drug market which will grow to $1.1 billion by 2013, according to a study by EPiQ Market Intelligence Program. Pancreatic cancer is the fourth most frequent cause of cancer deaths in the U.S.  According to the American Cancer Society (ACS), the number of Americans diagnosed with pancreatic cancer is expected to increase each year. This year, ACS estimates that more than 37,000 men and women will be diagnosed with pancreatic cancer, with, unfortunately, 34,000 patients estimated to succumb to this disease.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui

Moving Average

GNVC is trading above its 13-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

MACD

The MACD for GNVC currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Bollinger Bands

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.

Source: http://www.scottrade.com

Comparative Analysis

GNVC’s product candidates have not yet received the required regulatory approvals, either from the FDA for the United States or from regulatory agencies outside of the United States. The Company recognizes that the development and commercialization of its product candidates require significant research and development work and clinical trial work, as well as significant manufacturing and process development efforts. It expects these activities to result in significant operating losses for the foreseeable future. However, the Company stated that it will continue to look for government sponsored research collaborations and grants to help offset future anticipated losses from operations.

GNVC has a negative Return on Assets of -89.32%, compared with an industry average of 1.28%; Return on Investment of -133.49%, compared to an industry average of1.67%; and a Return on Equity of -138.12%, compared with an industry average of 2.28%.

Source: Yahoo! Finance, Analyst Estimates.

Insider Trading Activity

NET SHARE PURCHASE ACTIVITY

Data provided by Thomson Financial

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