10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                         to                         .

Commission File Number:  000-21088

VICAL INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware	93-0948554
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10390 Pacific Center Court San Diego, California	92121
(Address of principal executive offices)	(Zip Code)

(858) 646-1100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Total shares of common stock outstanding at October 15, 2015: 91,524,527

VICAL INCORPORATED

FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION
	ITEM 1. Financial Statements	3
	Balance Sheets (unaudited) as of September 30, 2015 and December 31, 2014	3
	Statements of Operations (unaudited) for the three and nine months ended September 30, 2015 and 2014	4
	Statements of Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2015 and 2014	5
	Statements of Cash Flows (unaudited) for the nine months ended September 30, 2015 and 2014	6
	Notes to Financial Statements (unaudited)	7
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
	ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	19
	ITEM 4. Controls and Procedures	20
PART II. OTHER INFORMATION
	ITEM 1. Legal Proceedings	21
	ITEM 1A. Risk Factors	21
	ITEM 6. Exhibits	32
SIGNATURE		33

2

PART I. FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

VICAL INCORPORATED

BALANCE SHEETS

(In thousands, except par value data)

(Unaudited)

	September 30,			December 31,
	2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	18,741		$	20,471
Marketable securities, available-for-sale		19,864			23,499
Restricted cash		3,246			3,182
Receivables and other assets		5,769			4,178
Total current assets		47,620			51,330
Long-term investments		2,077			1,971
Property and equipment, net		2,010			2,639
Intangible assets, net		1,522			1,660
Other assets		191			379
Total assets	$	53,420		$	57,979
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	3,364		$	5,201
Deferred revenue		2,110			—
Total current liabilities		5,474			5,201
Long-term liabilities:
Deferred rent		494			856
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.01 par value, 160,000 shares authorized, 91,513 and 90,334 shares    issued and outstanding at September 30, 2015, and December 31, 2014, respectively		915			903
Additional paid-in capital		448,976			446,698
Accumulated deficit		(402,550	)		(395,667	)
Accumulated other comprehensive income (loss)		111			(12	)
Total stockholders' equity		47,452			51,922
Total liabilities and stockholders' equity	$	53,420		$	57,979

See accompanying notes to unaudited financial statements

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VICAL INCORPORATED

STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Revenues:
Contract revenue	$	4,427		$	3,004		$	12,382		$	9,073
License and royalty revenue		590			438			1,755			1,321
Total revenues		5,017			3,442			14,137			10,394
Operating expenses:
Research and development		2,128			3,180			8,222			7,705
Manufacturing and production		1,306			2,292			6,626			7,457
General and administrative		1,916			2,366			6,271			7,176
Total operating expenses		5,350			7,838			21,119			22,338
Loss from operations		(333	)		(4,396	)		(6,982	)		(11,944	)
Other income:
Investment and other income, net		33			32			99			85
Net loss	$	(300	)	$	(4,364	)	$	(6,883	)	$	(11,859	)
Basic and diluted net loss per share	$	(0.00	)	$	(0.05	)	$	(0.08	)	$	(0.13	)
Weighted average shares used in computing basic and diluted net loss per share		91,957			89,976			91,600			88,154

See accompanying notes to unaudited financial statements

4

VICAL INCORPORATED

STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net loss	$	(300	)	$	(4,364	)	$	(6,883	)	$	(11,859	)
Other comprehensive loss:
Unrealized gain (loss) on available-for-sale and long-term marketable securities:
Unrealized gain (loss) arising during holding period		98			(69	)		123			(59	)
Other comprehensive gain (loss)		98			(69	)		123			(59	)
Total comprehensive loss	$	(202	)	$	(4,433	)	$	(6,760	)	$	(11,918	)

See accompanying notes to unaudited financial statements

5

VICAL INCORPORATED

STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(6,883	)	$	(11,859	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		884			1,330
Write-off of abandoned patents		50			331
Loss on sale of property and equipment		2			—
Compensation expense related to stock options and awards		1,534			2,451
Purchase of technology license with common stock		775			—
Changes in operating assets and liabilities:
Receivables and other assets		(1,403	)		(99	)
Accounts payable and accrued expenses		(1,885	)		1,050
Deferred revenue		2,110			(113	)
Deferred rent		(313	)		(266	)
Net cash used in operating activities		(5,129	)		(7,175	)
Cash flows from investing activities:
Maturities of marketable securities		15,030			8,000
Purchases of marketable securities		(11,500	)		(20,437	)
Purchases of property and equipment		(58	)		(43	)
Patent expenditures		(53	)		(240	)
Net cash provided by (used in) investing activities		3,419			(12,720	)
Cash flows from financing activities:
Net proceeds from issuance of common stock		3			3,776
Payment of withholding taxes for net settlement of restricted stock units		(23	)		(58	)
Net cash (used in) provided by financing activities		(20	)		3,718
Net decrease in cash and cash equivalents		(1,730	)		(16,177	)
Cash and cash equivalents at beginning of period		20,471			38,837
Cash and cash equivalents at end of period	$	18,741		$	22,660

See accompanying notes to unaudited financial statements

6

VICAL INCORPORATED

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

1. BASIS OF PRESENTATION

Vical Incorporated, or the Company, a Delaware corporation, was incorporated in April 1987 and has devoted substantially all of its resources since that time to its research and development programs. The Company researches and develops biopharmaceutical products, including those based on its patented DNA delivery technologies, for the prevention and treatment of serious or life-threatening diseases.

All of the Company’s potential products are in research and development phases. No revenues have been generated from the sale of any such products, nor are any such revenues expected for at least the next several years. The Company earns revenue from research and development agreements with pharmaceutical collaborators and grant and contract arrangements with government entities. Most of the Company’s product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing. All product candidates that advance to clinical testing will require regulatory approval prior to commercial use, and will require significant costs for commercialization. There can be no assurance that the Company’s research and development efforts, or those of its collaborators, will be successful. The Company expects to continue to incur substantial losses and not generate positive cash flows from operations for at least the next several years. No assurance can be given that the Company can generate sufficient product revenue to become profitable or generate positive cash flows from operations.

The unaudited financial statements at September 30, 2015, and for the three and nine months ended September 30, 2015 and 2014, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC, and with accounting principles generally accepted in the United States applicable to interim financial statements. These unaudited financial statements have been prepared on the same basis as the audited financial statements included in the Company’s Annual Report on Form 10-K and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented. Interim results are not necessarily indicative of results expected for a full year or future periods. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. These unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2014, included in its Annual Report on Form 10-K filed with the SEC.

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents consist of cash and highly liquid securities with original maturities at the date of acquisition of ninety days or less and can be liquidated without prior notice or penalty. Investments with an original maturity of more than ninety days are considered marketable securities and have been classified by management as available-for-sale. These investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current balance sheet date which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary. Such investments are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Realized gains and losses from the sale of available-for-sale securities or the amounts, net of tax, reclassified out of accumulated other comprehensive income (loss), if any, are determined on a specific identification basis.

Restricted Cash

The Company is required to maintain a letter of credit securing an amount equal to twelve months of the current monthly installment of base rent for the term of its primary facilities lease, which ends in August 2017. Under certain circumstances, the Company may be able to eliminate the need for the letter of credit. As of September 30, 2015, and December 31, 2014, restricted cash of $3.2 million was pledged as collateral for this letter of credit.

Revenue Recognition

Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Certain portions of the Company’s revenue are generated through manufacturing contracts and stand-alone license agreements.

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Multiple-element arrangements

The Company has entered into multiple-element arrangements. In order to account for the multiple-element arrangements, the Company identifies the deliverables included within the agreement and evaluates which deliverables represents separate units of accounting. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation. The delivered item(s) must have value to the customer on a standalone basis and, if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the Company’s control.

A delivered item is considered a separate unit of accounting when the delivered item has value to the partner on a standalone basis based on the consideration of the relevant facts and circumstances for each arrangement. Factors considered in this determination include the research capabilities of the partner and the availability of research expertise in this field in the general marketplace. Arrangement consideration is allocated at the inception of the agreement to all identified units of accounting based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence, or VSOE, of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, the Company uses its best estimate of the selling price for the deliverable. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units. Changes in the allocation of the sales price between delivered and undelivered elements can impact revenue recognition but do not change the total revenue recognized under any agreement. If facts and circumstances dictate that the license has standalone value from the undelivered items, which generally include research and development services and the manufacture of drug products, the license is identified as a separate unit of accounting and the amounts allocated to the license are recognized upon the delivery of the license, assuming the other revenue recognition criteria have been met. However, if the amounts allocated to the license through the relative selling price allocation exceed the upfront license fee, the amount recognized upon the delivery of the license is limited to the upfront fee received. If facts and circumstances dictate that the license does not have standalone value, the transaction price, including any upfront license fee payments received, are allocated to the identified separate units of accounting and recognized as those items are delivered.

The terms of the Company’s partnership agreements provide for milestone payments upon achievement of certain regulatory and commercial events. Under the Milestone Method, the Company recognizes consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following criteria: 1) The consideration is commensurate with either the entity’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone, 2) The consideration relates solely to past performance, and 3) The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity’s performance or on the occurrence of a specific outcome resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company.

Contract Services, Grant and Royalty Revenue

The Company recognizes revenues from contract services and federal government research grants during the period in which the related expenditures are incurred and related payments for those services are received or collection is reasonably assured. Royalties to be received based on sales of licensed products by the Company’s partners incorporating the Company’s licensed technology are recognized when received.

Manufacturing and Production Costs

Manufacturing and production costs include expenses related to manufacturing contracts and expenses for the production of plasmid DNA for use in the Company’s research and development efforts. Manufacturing expenses related to manufacturing contracts are deferred and expensed when the related revenue is recognized. Production expenses related to the Company’s research and development efforts are expensed as incurred.

Net Loss Per Share

Basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted loss per share excludes any assumed exercise of stock options and any assumed issuance of common stock under restricted stock units as the effect would be antidilutive. Common stock equivalents of 0.1 million and 0.4 million for the three months ended September 30, 2015 and 2014, respectively, were

8

excluded from the calculation because of their antidilutive effect.  Common stock equivalents of 0.4 million and 0.5 million for the nine months ended September 30, 2015 and 2014, respectively, were excluded from the calculation because of their antidilutive effect.

Stock-Based Compensation

The Company records its compensation expense associated with stock options and other forms of equity compensation based on their fair value at the date of grant using the Black-Scholes-Merton option pricing model. Stock-based compensation includes amortization related to stock option awards based on the estimated grant date fair value. Stock-based compensation expense related to stock options includes an estimate for forfeitures and the portion that is ultimately expected to vest is recognized ratably over the vesting period of the option. In addition, the Company records expense related to RSUs granted based on the fair value of those awards on the grant date. The fair value related to the RSUs is amortized to expense over the vesting term of those awards. Stock-based compensation expense related to RSUs includes an estimate for forfeitures and the portion expected to vest is recognized ratably over the requisite service period. The expected forfeiture rate of all equity-based compensation is based on observed historical patterns of the Company’s employees and is estimated to be 8.75% and 11.2% annually for each of the nine months ended September 30, 2015 and 2014, respectively.

Stock-based compensation expense for a stock-based award with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any recognized compensation expense is reversed.

Recent Accounting Pronouncements

In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The guidance allows for either full retrospective or modified retrospective adoption and will become effective for the Company in the first quarter of 2019. The Company is evaluating the alternative transition methods and the potential effects of the adoption of this update on its financial statements.

In August 2014, the FASB issued an amendment to the accounting guidance related to the evaluation of an entity to continue as a going concern. The amendment establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The amendment also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. The amended guidance is effective prospectively for fiscal years beginning after December 15, 2016. The new guidance will not have an impact on the Company’s financial position, results of operations or cash flows.

2. STOCK-BASED COMPENSATION

Total stock-based compensation expense was allocated to research and development, manufacturing and production and general and administrative expense as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Research and development	$	93	$	186	$	309	$	628
Manufacturing and production		42		56		123		177
General and administrative		302		488		1,102		1,646
Total stock-based compensation expense	$	437	$	730	$	1,534	$	2,451

During the nine months ended September 30, 2015 and 2014, the Company granted stock-based awards with a total estimated value of $1.9 million and $2.3 million, respectively. At September 30, 2015, total unrecognized estimated compensation expense related to unvested stock-based awards granted prior to that date was $1.7 million, which is expected to be recognized over a weighted-average period of 1.4 years. Stock-based awards granted during the nine months ended September 30, 2015 and 2014, were equal to 3.3% and 3.0%, respectively, of the outstanding shares of common stock at the end of the applicable period.

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3. MARKETABLE SECURITIES, AVAILABLE FOR SALE

The following is a summary of available-for-sale marketable securities (in thousands):

September 30, 2015	Amortized Cost		Unrealized Gain		Unrealized Loss		Market Value
U.S. treasuries	$	5,030	$	5	$	—	$	5,035
Government-sponsored enterprise securities		2,000		—		—		2,000
Corporate bonds		2,005		—		—		2,005
Certificates of deposit		10,824		—		—		10,824
	$	19,859	$	5	$	-	$	19,864

December 31, 2014	Amortized Cost		Unrealized Gain		Unrealized Loss		Market Value
U.S. treasuries	$	5,558	$	—	$	1	$	5,557
Government-sponsored enterprise securities		7,499		—		6		7,493
Corporate bonds		2,025		—		5		2,020
Certificates of deposit		8,429		—		—		8,429
	$	23,511	$	-	$	12	$	23,499

At September 30, 2015, $0.5 million of these securities were scheduled to mature outside of one year. The Company did not realize any gains or losses on sales of available-for-sale securities for the nine months ended September 30, 2015. As of September 30, 2015, none of the securities had been in a continuous material unrealized loss position longer than one year.

4. OTHER BALANCE SHEET ACCOUNTS

Accounts payable and accrued expenses consisted of the following (in thousands):

	September 30,		December 31,
	2015		2014
Employee compensation	$	1,850	$	2,471
Clinical trial accruals		206		1,686
Accounts payable		316		227
Deferred rent		480		432
Other accrued liabilities		512		385
Total accounts payable and accrued expenses	$	3,364	$	5,201

5. LONG-TERM INVESTMENTS

As of September 30, 2015, the Company held an auction rate security with a par value of $2.5 million. This auction rate security has not experienced a successful auction since the liquidity issues experienced in the global credit and capital markets in 2008. As a result, the security is classified as a long-term investment as it is scheduled to mature in 2038. The security was rated A- by Standard and Poor’s as of September 30, 2015. The security continues to pay interest according to its stated terms.

The valuation of the Company’s auction rate security is subject to uncertainties that are difficult to predict. The fair value of the security is estimated utilizing a discounted cash flow analysis. The key drivers of the valuation model include the expected term, collateral underlying the security investment, the creditworthiness of the counterparty, the timing of expected future cash flows, discount rates, liquidity and the expected holding period. The security was also compared, when possible, to other observable market data for securities with similar characteristics. As of September 30, 2015, the inputs used in the Company’s discounted cash flow analysis assumed an interest rate of 1.39%, an estimated redemption period of five years and a discount rate of 1.50%. Based on the valuation of the security, the Company has recognized cumulative losses of $0.5 million as of September 30, 2015, none of which were realized during the three months ended September 30, 2015. The losses when recognized are included in investment and other income. The market value of the security has partially recovered. Included in other comprehensive income (loss) are unrealized gains (losses) of $106,000 and $(43,000) for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015,

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the Company had recorded cumulative unrealized gains of $0.3 million. The resulting carrying value of the auction rate security at September 30, 2015, was $2.1 million. Any future decline in market value may result in additional losses being recognized.

6. FAIR VALUE MEASUREMENTS

The Company measures fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

· Level 1: Observable inputs such as quoted prices in active markets;

· Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

· Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.   

Cash equivalents, marketable securities and long-term investments measured at fair value are classified in the table below in one of the three categories described above (in thousands):

	Fair Value Measurements
September 30, 2015	Level 1		Level 2		Level 3		Total
Certificates of deposit	$	10,824	$	—	$	—	$	10,824
U.S. treasuries		5,035		—		—		5,035
Corporate bonds		—		2,005		—		2,005
Government-sponsored enterprise securities		—		2,000		—		2,000
Auction rate securities		—		—		2,077		2,077
	$	15,859	$	4,005	$	2,077	$	21,941

	Fair Value Measurements
December 31, 2014	Level 1		Level 2		Level 3		Total
Certificates of deposit	$	8,674	$	—	$	—	$	8,674
Money market funds		169		—		—		169
U.S. treasuries		5,557		—		—		5,557
Corporate bonds		—		2,020		—		2,020
Government-sponsored enterprise securities		—		7,493		—		7,493
Auction rate securities		—		—		1,971		1,971
	$	14,400	$	9,513	$	1,971	$	25,884

The Company’s investments in U.S. treasury securities, certificates of deposit and money market funds are valued based on publicly available quoted market prices for identical securities as of September 30, 2015. The Company determines the fair value of corporate bonds and other government-sponsored enterprise related securities with the aid of valuations provided by third parties using proprietary valuation models and analytical tools. These valuation models and analytical tools use market pricing or similar instruments that are both objective and publicly available, including matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids and/or offers. The Company validates the valuations received from its primary pricing vendors for its level 2 securities by examining the inputs used in that vendor’s pricing process and determines whether they are reasonable and observable. The Company also compares those valuations to recent reported trades for those securities. The Company did not adjust any of the valuations received from these independent third parties with respect to any of its level 2 securities at September 30, 2015. The Company did not transfer any investments between level categories during the three and nine months ended September 30, 2015. The valuation of the Company’s investments in auction rate securities, which includes significant unobservable inputs, is more fully described in Note 5.

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Activity for assets measured at fair value using significant unobservable inputs (Level 3) is presented in the table below (in thousands):

Balance at December 31, 2014	$	1,971
Total unrealized gains, excluding tax impact, included in other comprehensive loss		106
Balance at September 30, 2015	$	2,077
Total gains or losses for the period included in net loss attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	—

7. COMMITMENTS AND CONTINGENCIES

In late October and early November 2013, following the Company’s announcement of the results of its Phase 3 trial of Allovectin^® and the subsequent decline of the price of its common stock, two putative securities class action complaints were filed in the U.S. District Court for the Southern District of California against the Company and certain of its current and former officers. On February 26, 2014, the two cases were consolidated into one action and a lead plaintiff and lead counsel were appointed, or Consolidation Order.  On May 12, 2014, the lead plaintiff filed a first amended consolidated complaint alleging that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially false and misleading statements regarding the Company’s business prospects and the prospects for Allovectin^®, thereby artificially inflating the price of its common stock.  On June 9, 2014, the defendants filed a motion to dismiss the first amended complaint and a motion to strike certain allegations in the amended complaint.  On March 9, 2015, the Court granted defendants’ motion to dismiss the first amended complaint and terminated as moot defendants’ motion to strike, or Order. The Lead plaintiff was granted leave to amend his first amended complaint on or before March 25, 2015. The lead plaintiff chose not to amend his complaint and instead stipulated to an entry of judgment. On April 28, 2015, the Court entered final judgment dismissing the action, or Judgment. On May 28, 2015, the lead plaintiff appealed the Order and Judgment to the U.S. Court of Appeals for the Ninth Circuit. That same day, another group of the Company’s stockholders, that had previously moved for appointment as lead plaintiff, or the Vical Investor Group, also appealed the Order and Judgment, as well as the Consolidation Order, to the U.S. Court of Appeals for the Ninth Circuit. On August 3, 2015, the Vical Investor Group voluntarily dismissed its appeal. On October 8, 2015, the lead plaintiff-appellant filed an opening brief in support of his appeal. The Defendants’ answering brief is currently due on November 9, 2015.

In the ordinary course of business, the Company may become a party to additional lawsuits involving various matters. The Company is unaware of any such lawsuits presently pending against it which, individually or in the aggregate, are deemed to be material to the Company’s financial condition or results of operations.

The Company prosecutes its intellectual property vigorously to obtain the broadest valid scope for its patents. Due to uncertainty of the ultimate outcome of these matters, the impact on future operating results or the Company’s financial condition is not subject to reasonable estimates.

8. ASTELLAS OUT-LICENSE AGREEMENTS

In July 2011, the Company entered into license agreements with Astellas Pharma Inc., or Astellas, granting Astellas  exclusive, worldwide, royalty-bearing licenses under certain of the Company's know-how and intellectual property to develop and commercialize certain products containing plasmids encoding certain forms of cytomegalovirus, glycoprotein B and/or phosphoprotein 65, including ASP0113 (TransVax™) but excluding CyMVectin™.

Under the terms of the agreements, the Company is performing research and development services and manufacturing services which are being paid for by Astellas. During the three months ended September 30, 2015 and 2014, the Company recognized $4.4 million and $3.0 million, respectively, of revenue related to these contract services. During the nine months ended September 30, 2015 and 2014, the Company recognized $12.4 million and $9.1 million, respectively, of revenue related to these contract services. The Company also recognized $1.5 million and $1.1 million in license revenue under the Astellas agreements during the nine months ended September 30, 2015 and 2014, respectively.

9. ASTELLAS IN-LICENSE AGREEMENTS

In March 2015, the Company entered into license and stock purchase agreements with Astellas, granting Vical exclusive worldwide license to develop and commercialize a novel antifungal, VL-2397, formally known as ASP2397. VL-2397 is a potential therapeutic for invasive fungal infections, including invasive aspergillosis. Astellas received 861,216 shares of unregistered Vical common stock and $250,000 in cash. The $250,000 cash payment and the fair value of the common stock issued of $775,094 were

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included in research and development expenses during the nine months ending September 30, 2015.  Astellas will also be eligible to receive up to $100 million in aggregate milestone payments, the vast majority of which are commercial and sales milestones, and single-digit royalties on net sales of commercial products.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q, or Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including statements regarding our business, our financial position, the research and development of biopharmaceutical products based on our patented DNA delivery and other technologies, the funding of our research and development efforts, and other statements describing our goals, expectations, intentions or beliefs. Such statements reflect our current views and assumptions and are subject to risks and uncertainties, particularly those inherent in the process of developing and commercializing biopharmaceutical products based on our patented DNA delivery and other technologies. Actual results could differ materially from those projected herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 2014, and in our other filings with the SEC, and those identified in Part II, Item 1A entitled “Risk Factors” beginning on page 21 of this Report. As a result, you are cautioned not to rely on these forward-looking statements. We disclaim any duty to update any forward-looking statement to reflect events or circumstances that occur after the date on which such statement is made.

Overview

We research and develop biopharmaceutical products, including those based on our patented DNA delivery technologies, for the prevention and treatment of serious or life-threatening diseases.

We currently have four active, independent or partnered, development programs in the area of infectious disease comprised of:

· An ongoing Phase 3 clinical trial of ASP0113 for prevention of cytomegalovirus, or CMV, reactivation in stem cell transplant recipients and an ongoing Phase 2 clinical trial of ASP0113 for prevention of CMV infection in kidney transplant recipients, both in collaboration with Astellas Pharma Inc., or Astellas. Astellas expects enrollment in the Phase 3 clinical trial to be completed during the third quarter of 2016. Enrollment in the Phase 2 trial was completed in May of 2015;

· In June 2015, we announced top-line results from an ongoing randomized, double-blind, placebo controlled Phase 1/2 clinical study of our therapeutic genital herpes vaccine, designed to reduce viral shedding and genital herpes lesions in herpes simplex virus type 2, or HSV-2, infected patients. The trial enrolled patients across seven U.S. sites and evaluated a monovalent (gD) vaccine and a bivalent (gD + UL46) vaccine. Neither the monovalent nor bivalent vaccine met the primary endpoint (reduction of viral shedding from baseline). The trial is ongoing and all patients are being followed for safety for 12 months and efficacy for nine months after their final vaccine dose. During that period we will collect additional clinical efficacy data including lesion recurrence rate and lesion rate, which will enable us to determine the appropriate next steps for this program. If the additional data is not favorable, we may decide to cease further clinical development of this vaccine candidate.

· An ongoing preclinical program of VL-2397 for invasive fungal infections, including invasive Aspergillus, which are major causes of morbidity and mortality in immunocompromised patients, including transplant recipients. We expect to initiate a Phase 1 trial of VL-2397 in the first half of 2016; and

· A completed preclinical program, with an allowed investigational new drug application, or IND, using our CyMVectin™ prophylactic vaccine formulated with our proprietary Vaxfectin^® adjuvant to prevent CMV infection during pregnancy. We are working with Virginia Commonwealth University who plans to conduct an investigator sponsored Phase 1 clinical trial to determine the neutralizing antibody responses in normal healthy female subjects who are CMV seronegative.

In addition, we have licensed complementary technologies from leading research institutions and biopharmaceutical companies.

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Product Development

We, together with our licensees and collaborators, are currently developing a number of DNA-based vaccines and other therapeutics for the prevention or treatment of infectious diseases. The table below summarizes our independent programs and corporate and government collaborations.

Product/Concept	Intended Use	DevelopmentStatus1	Lead Developer
Independent Programs
Therapeutic and prophylactic    vaccines for HSV-2	Prevent and protect against recurring    flare-ups, reduce viral shedding and    transmission	Phase 1/2 2	Vical
CyMVectin™ prophylactic    vaccine for CMV	Prevent infection during pregnancy to    preclude fetal transmission	Preclinical complete	Vical
VL-2397 antifungal	Treatment of invasive fungal infections	Preclinical	Vical
Corporate Collaborations
ASP0113 therapeutic vaccine    for CMV	Protect against infection after stem cell    transplants	Phase 3	Astellas
ASP0113 therapeutic vaccine    for CMV	Protect against infection after solid organ    transplants	Phase 2	Astellas
ONCEPT® therapeutic cancer    vaccine encoding human    tyrosinase	Adjunct treatment to increase survival    time of  dogs with oral melanoma	Marketed in the    United States	Merial
Government Collaboration
Tetravalent dengue vaccine	Prevent dengue disease caused by all 4    dengue serotypes	Phase 1	Naval Medical    Research Center

¹ “Preclinical” indicates that a specific product candidate in a nonclinical setting has shown functional activity that is relevant to a targeted medical need, and is advancing toward initial human clinical testing. “Phase 1” clinical trials are typically conducted with a small number of patients or healthy subjects to evaluate safety, determine a safe dosage range, identify side effects, and, if possible, gain early evidence of effectiveness. “Phase 2” clinical trials are conducted with a larger group of patients to evaluate effectiveness of an investigational product for a defined patient population, and to determine common short-term side effects and risks associated with the product candidate. “Phase 3” clinical trials involve large scale, multi-center, comparative trials that are conducted with patients afflicted with a target disease to evaluate the overall benefit-risk relationship of the investigational product and to provide an adequate basis for product labeling.

² In June 2015, we announced top-line results from an ongoing randomized, double-blind, placebo controlled Phase 1/2 clinical study of our therapeutic genital herpes vaccine, designed to reduce viral shedding and genital herpes lesions in HSV-2 infected patients. The trial enrolled patients across seven U.S. sites and evaluated a monovalent (gD) vaccine and a bivalent (gD + UL46) vaccine. Neither the monovalent nor bivalent vaccine met the primary endpoint (reduction of viral shedding from baseline). The trial is ongoing and all patients are being followed for safety for 12 months and efficacy for nine months after their final vaccine dose. During that period we will collect additional clinical efficacy data including lesion recurrence rate and lesion rate, which will enable us to determine the appropriate next steps for this program. If the additional data is not favorable, we may decide to cease further clinical development of this vaccine candidate.

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Research, Development and Manufacturing Programs

To date, we have not received revenues from the sale of our independently developed pharmaceutical products and have received minimal revenues from the sale of commercially marketed products by our licensees. We earn revenues by performing services under research and development and manufacturing contracts, from grants and from licensing access to our proprietary technologies. Revenues by source were as follows (in millions):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Source	2015		2014		2015		2014
Astellas supply and services contract	$	4.4	$	3.0	$	12.4	$	9.1
Astellas license		0.5		0.4		1.5		1.1
Other royalties and licenses		0.1		—		0.2		0.2
Total revenues	$	5.0	$	3.4	$	14.1	$	10.4

Research, development, manufacturing and production costs by major program, as well as other costs, were as follows (in millions):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Program	2015		2014		2015		2014
CMV	$	2.9	$	3.3	$	10.1	$	10.5
HSV-2		0.3		1.2		2.7		2.9
Other research, development, manufacturing and production		0.2		1.0		2.0		1.8
Total research, development, manufacturing and production	$	3.4	$	5.5	$	14.8	$	15.2

Our current development focus includes our novel DNA vaccines for CMV and HSV-2, and our novel antifungal for the treatment of invasive fungal infections.

We are developing HSV-2 and CyMVectin™ vaccine candidates as well our antifungal, VL-2397, and these programs will require significant additional funds to advance through development to commercialization. From inception through September 30, 2015, we have spent approximately $16.5 million on our HSV-2 program, $104.7 million on our CMV programs including ASP0113 and $2.1 million on our antifungal program.

We have other product candidates in the research stage. It can take many years to develop product candidates from the initial decision to screen product candidates, perform preclinical and safety studies, and perform clinical trials leading up to possible approval of a product by the U.S. Food and Drug Administration, or FDA, or comparable foreign agencies. The outcome of the research is unknown until each stage of the testing is completed, up through and including the registration of clinical trials. Accordingly, we are unable to predict which potential product candidates we may proceed with, the time and cost to complete development, and ultimately whether we will have a product approved by the FDA or comparable foreign agencies.

As a result, we expect to incur substantial operating losses for at least the next several years, due primarily to the advancement of our research and development programs, the cost of preclinical studies and clinical trials, spending for outside services, costs related to maintaining our intellectual property portfolio, costs due to manufacturing activities, costs related to our facilities, and possible advancement toward commercialization activities.

Critical Accounting Policies and Estimates

The preparation and presentation of financial statements in accordance with accounting principles generally accepted in the United States requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses in our financial statements and accompanying notes. Management bases its estimates on historical information and assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and circumstances that may impact us in the future, they are inherently uncertain and actual results may differ materially from these estimates.

Our critical accounting policies are those that affect our financial statements materially and involve a significant level of judgment by management. Our critical accounting policies regarding revenue recognition are in the following areas: license and

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royalty agreements, manufacturing contracts, contract services and grant revenues. Our critical accounting policies also include recognition of research and development expenses and the valuation of long-lived and intangible assets.

There have been no material changes to our critical accounting policies and estimates as compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Recent Accounting Pronouncements

For information on the recent accounting pronouncements which may impact our business, see Note 1 of the Notes to Financial Statements included in this Report.

Results of Operations

Three Months Ended September 30, 2015, Compared with Three Months Ended September 30, 2014

Total Revenues. Total revenues increased $1.6 million to $5.0 million for the three months ended September 30, 2015, from $3.4 million for the three months ended September 30, 2014. This increase was primarily due to an increase in the delivery of ASP0113 material under our license agreements with Astellas.

Research and Development Expenses. Research and development expenses decreased $1.1 million, or 33.1%, to $2.1 million for the three months ended September 30, 2015, from $3.2 million for the three months ended September 30, 2014.  This decrease was primarily due to a decrease in HSV-2 clinical trial costs as the trial nears completion.

Manufacturing and Production Expenses. Manufacturing and production expenses decreased $1.0 million, or 43.0%, to $1.3 million for the three months ended September 30, 2015, from $2.3 million for the three months ended September 30, 2014. This decrease was primarily due to a $0.9 million net increase in deferred contract costs capitalized during the three months ended September 30, 2015 related to clinical trial materials manufactured under our contract manufacturing agreement with IPPOX.

General and Administrative Expenses. General and administrative expenses decreased $0.5 million, or 19.0%, to $1.9 million for the three months ended September 30, 2015, from $2.4 million for the three months ended September 30, 2014. This decrease was primarily due to a decrease in legal fees related to the ongoing securities class action litigation and a decrease in employee stock based compensation.

Investment and Other Income, Net. Investment and other income, net, increased $1,000 to $33,000 for the three months ended September 30, 2015, from $32,000 for the three months ended September 30, 2014.

Nine Months Ended September 30, 2015, Compared with Nine Months Ended September 30, 2014

Total Revenues. Total revenues increased $3.7 million to $14.1 million for the nine months ended September 30, 2015, from $10.4 million for the nine months ended September 30, 2014. This increase was primarily due to an increase in services performed and deliveries of ASP0113 materials under our license agreements with Astellas.

Research and Development Expenses. Research and development expenses increased $0.5 million, or 6.7%, to $8.2 million for the nine months ended September 30, 2015, from $7.7 million for the nine months ended September 30, 2014.  This increase was primarily due to $1.1 million in expenses recognized in connection with the in-license of VL-2397 in March 2015 from Astellas, offset in part by a decrease in clinical trial costs associated with our HSV-2 program.

Manufacturing and Production Expenses. Manufacturing and production expenses decreased $0.8 million, or 11.1%, to $6.6 million for the nine months ended September 30, 2015, from $7.5 million for the nine months ended September 30, 2014. This decrease was primarily due to a $0.9 million net increase in deferred contract costs capitalized during the nine months ended September 30, 2015 related to clinical trial materials manufactured under our contract manufacturing agreement with IPPOX.

General and Administrative Expenses. General and administrative expenses decreased $0.9 million, or 12.6%, to $6.3 million for the nine months ended September 30, 2015, from $7.2 million for the nine months ended September 30, 2014. This decrease was primarily due to a decrease in employee stock based compensation and legal fees related to the ongoing securities class action litigation.

Investment and Other Income, Net. Investment and other income, net, increased $14,000 to $99,000 for the nine months ended September 30, 2015, from $85,000 for the nine months ended September 30, 2014.

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Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through private placements and public offerings of equity securities, and revenues from our operations. Cash, cash equivalents, marketable securities, and long-term investments, including restricted cash, totaled $43.9 million at September 30, 2015, compared with $49.1 million at December 31, 2014. The decrease in our cash, cash equivalents and marketable securities for the nine months ended September 30, 2015, was primarily the result of the use of cash to fund our operations.

Net cash used in operating activities was $5.1 million and $7.2 million for the nine months ended September 30, 2015 and 2014, respectively. The decrease in net cash used in operating activities for the nine months ended September 30, 2015, compared with the prior year period, was primarily the result of a decrease in our net loss, offset in part by a decrease in accrued employee compensation and clinical trial accruals, combined with an increase in receivables.

Net cash provided by (used in) investing activities was $3.4 million and $(12.7) million for the nine months ended September 30, 2015 and 2014, respectively. The increase in net cash provided by investing activities for the nine months ended September 30, 2015, compared with the prior year period, was primarily the result of an increase in net maturities of marketable securities.

Net cash (used in) provided by financing activities was $(20,000) and $3.7 million for the nine months ended September 30, 2015 and 2014, respectively. The decrease in net cash provided by financing activities for the nine months ended September 30, 2015, compared with the prior year period, was primarily the result of a decrease in net proceeds from the sale of common stock.

A discussion of our exposure to auction rate securities is included in Part 1, Item 3 of this Report under the heading “Quantitative and Qualitative Disclosures About Market Risk.”

In the long-term, we expect to incur substantial additional research and development expenses, manufacturing and production expenses, and general and administrative expenses, including increases in costs related to personnel, preclinical and clinical testing, outside services, facilities, intellectual property and possible commercialization. Our future capital requirements will depend on many factors, including continued scientific progress in our research and development programs, the scope and results of preclinical testing and clinical trials, the time and costs involved in obtaining regulatory approvals, the costs involved in filing, prosecuting, enforcing and defending patent claims, the impact of competing technological and market developments, the cost of manufacturing scale-up and validation, and possible commercialization activities and arrangements. We may seek additional funding through research and development relationships with suitable potential corporate collaborators. We may also seek additional funding through public or private financings. We currently have on file an effective shelf registration statement that allows us to raise up to $100.0 million from the sale of common stock, preferred stock, debt securities and/or warrants. However, additional financing may not be available on favorable terms or at all. If additional financing is not available, we anticipate that our available cash and existing sources of funding will be adequate to satisfy our cash needs at least through December 31, 2016.

Contractual Obligations

Under our out-license agreements with Astellas, we are required to make certain payments to the City of Hope and CytRx in connection with the development and commercialization of our products licensed by Astellas. In addition, certain technology license agreements require us to make other payments if we or our sublicensees advance products through clinical development. For programs developed with the support of U.S. government funding, the U.S. government may have rights to resulting products without payment of royalties to us.

We may be required to make future payments to our licensors based on the achievement of milestones set forth in various in-licensing agreements, including our in-license agreement with Astellas related to VL-2397. In most cases, these milestone payments are based on the achievement of development or regulatory milestones, including the exercise of options to obtain licenses related to specific disease targets, commencement of various phases of clinical trials, filing of product license applications, approval of product licenses from the FDA or a foreign regulatory agency, and the first commercial sale of a related product. Payment for the achievement of milestones under our in-license agreements is highly speculative and subject to a number of contingencies.

The aggregate amount of additional milestone payments that we could be required to pay under our active in-license agreements in place at September 30, 2015, is approximately $106.8 million. These amounts assume that all remaining milestones associated with the milestone payments are met. In the event that product license approval for any of the related products is obtained, we may be required to make royalty payments in addition to these milestone payments. Although we believe that some of the milestones contained in our in-license agreements may be achieved, it is highly unlikely that a significant number of them will be achieved. Because the milestones are contingent, we are not in a position to reasonably estimate how much, if any, of the potential milestone

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payments will ultimately be paid, or when. Additionally, under the in-license agreements, many of the milestone events are related to progress in clinical trials which will take several years to achieve.

In addition, we have undertaken certain commitments under license agreements with collaborators, and under indemnification agreements with our officers and directors. Under the license agreements with our collaborators, we have agreed to continue to maintain and defend the patent rights licensed to the collaborators and, in the case of our agreements with Astellas, have agreed to undertake certain development and manufacturing activities. Under the indemnification agreements with our officers and directors, we have agreed to indemnify those individuals for any expenses and liabilities in the event of a threatened, pending or actual investigation, lawsuit, or criminal or investigative proceeding.

We have employment agreements that contain severance arrangements with our chief executive officer, or CEO, and our three  other executives. Under the agreement with our CEO, we are obligated to pay severance if we terminate the CEO’s employment without “cause,” or if the CEO resigns for “good reason,” as defined in the agreement, within the periods set forth therein. The severance for the CEO consists of continued base salary payments at the then-current rate, including the payment of health insurance premiums for 18 months, plus a payment equal to one and one-half times the CEO’s cash bonus in the previous year. In addition, the CEO receives accelerated vesting on all his unvested stock awards as if he had remained employed by us for 18 months from the date of termination. In the event that the termination occurs within 24 months of a “change in control,” as defined in the agreement, the severance for the CEO consists of a lump sum payment equal to 24 months of base salary at the then-current rate, the payment of health insurance premiums for 18 months, plus a payment equal to one and one-half times the CEO’s cash bonus in the previous year. In addition, all outstanding unvested stock awards will vest immediately. Under the agreements with our other three executives, we are obligated to pay severance if we terminate the executive’s employment without “cause,” or if the executive resigns for “good reason,” as defined in the agreements, within the periods set forth therein. The severance for the other executives consists of a lump-sum payment equal to 12 months of base salary at the then-current rate, including the payment of health insurance premiums for 12 months, plus a payment equal to the executive’s cash bonus in the previous year. In addition, the executive receives accelerated vesting on all his unvested stock awards as if he had remained employed by us for 12 months from the date of termination. In the event that the termination occurs within 12 months of a “change in control,” as defined in the agreements, the severance for the other executives consists of a lump sum payment equal to 18 months of base salary at the then-current rate, the payment of health insurance premiums for 12 months, plus a payment equal to the executive’s cash bonus in the previous year. In addition, all outstanding unvested stock awards will vest immediately. The maximum payments due under these employment agreements would have been $3.1 million if each such officer was terminated at September 30, 2015.

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to interest rate risk. Our investment portfolio is maintained in accordance with our investment policy which defines allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. Our investment portfolio consists of cash equivalents, both restricted and non-restricted, marketable securities and long-term investments. The average maturity of our investments, excluding our auction rate securities, is approximately three months. Our investments are classified as available-for-sale securities.

To assess our interest rate risk, we performed a sensitivity analysis projecting an ending fair value of our cash equivalents and current marketable securities using the following assumptions: a three month average maturity and a 150-basis‑point increase in interest rates. This pro forma fair value would have been $0.2 million lower than the reported fair value of our investments at September 30, 2015.

Our investment securities consist of auction rate securities, corporate debt securities and government agency securities. As of September 30, 2015, our long-term investments included a (at par value) $2.5 million auction rate security secured by municipal bonds. At September 30, 2015, the auction rate security we held maintained a Standard and Poor’s credit rating of A-. The auction rate security is a debt instrument with a long-term maturity and with an interest rate that is reset in short intervals through auctions. The conditions in the global credit markets have prevented some investors from liquidating their holdings of auction rate securities because the amount of securities submitted for sale has exceeded the amount of purchase orders for such securities. If there is insufficient demand for the securities at the time of an auction, the auction may not be completed and the interest rates may be reset to predetermined higher rates. When auctions for these securities fail, the investments may not be readily convertible to cash until a future auction of these investments is successful or they are redeemed or mature.

Since February 2008, there has been insufficient demand at auction for our auction rate security held at September 30, 2015. As a result, this security is currently not liquid, and we could be required to hold it until it is redeemed by the issuer or to maturity. As of September 30, 2015, we had recognized $0.5 million of losses related to the auction rate security by adjusting its carrying value. The market value of the security has partially recovered from the lows that created the losses. As of September 30, 2015, we had recorded cumulative unrealized gains of $0.3 million. Any future decline in market value may result in additional losses being recognized.

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The valuation of our auction rate security is subject to uncertainties that are difficult to predict. The fair value of the security is estimated utilizing a discounted cash flow analysis or other type of valuation model as of September 30, 2015. The key drivers of the valuation model include the expected term, collateralization underlying the security investment, the creditworthiness of the counterparty, the timing of expected future cash flows, discount rates, and the expected holding period. This security was also compared, when possible, to other observable market data for securities with similar characteristics.

In the event we need to access the funds that are not currently liquid, we will not be able to do so without the possible loss of principal, until a future auction for these investments is successful or they are redeemed by the issuer or they mature. If we are unable to sell these securities in the market or they are not redeemed, then we may be required to hold them until 2038 when they mature. We do not anticipate a need to access these funds for operational purposes for the foreseeable future. We will continue to monitor and evaluate these investments on an ongoing basis for impairment. Based on our ability to access our cash and other short-term investments, our expected operating cash flows, and our other sources of cash, we do not anticipate that the potential illiquidity of these investments will affect our ability to execute our current business plan.

ITEM 4.       CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Exchange Act as of the end of the period covered by this Report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective and were operating at a reasonable assurance level as of September 30, 2015.

Changes in Internal Control over Financial Reporting

Management has determined that there were no significant changes in our internal control over financial reporting that occurred during the three months ended September 30, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

In late October and early November 2013, following our announcement of the results of our Phase 3 trial of Allovectin^® and the subsequent decline of the price of our common stock, two putative securities class action complaints were filed in the U.S. District Court for the Southern District of California against us and certain of our current and former officers. On February 26, 2014, the two cases were consolidated into one action and a lead plaintiff and lead counsel were appointed (“Consolidation Order”).  On May 12, 2014, the lead plaintiff filed a first amended consolidated complaint alleging that the defendants violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially false and misleading statements regarding our business prospects and the prospects for Allovectin^®, thereby artificially inflating the price of our common stock.  On June 9, 2014, the defendants filed a motion to dismiss the first amended complaint and a motion to strike certain allegations in the amended complaint.  On March 9, 2015, the Court granted defendants’ motion to dismiss the first amended complaint and terminated as moot defendants’ motion to strike, or Order. The Lead plaintiff was granted leave to amend his first amended complaint on or before March 25, 2015. The Lead plaintiff chose not to amend his complaint and instead stipulated to an entry of judgment. On April 28, 2015, the Court entered final judgment dismissing the action, or Judgment. On May 28, 2015, the lead plaintiff appealed the Order and Judgment to the U.S. Court of Appeals for the Ninth Circuit. That same day, another group of our stockholders, that had previously moved for appointment as lead plaintiff, or the Vical Investor Group, also appealed the Order and Judgment, as well as the Consolidation Order, to the U.S. Court of Appeals for the Ninth Circuit. On August 3, 2015, the Vical Investor Group voluntarily dismissed its appeal. On October 8, 2015, the lead plaintiff-appellant filed an opening brief in support of his appeal. Defendants’ answering brief is currently due on November 9, 2015.

ITEM 1A.     RISK FACTORS

You should consider carefully the risks described below, together with all of the other information included in this Report, and in our other filings with the SEC, before deciding whether to invest in or continue to hold our common stock. The risks described below are all material risks currently known, expected or reasonably foreseeable by us. If any of these risks actually occur, our business, financial condition, results of operations or cash flow could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment.

The risk factors set forth below with an asterisk (*) next to the title are new risk factors or risk factors containing changes, including any material changes, from the risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC.

(*)None of our independently developed product candidates has been approved for sale, and we have a limited number of independently developed product candidates in clinical trials. If we do not develop commercially successful products, we may be forced to curtail or cease operations.

All of our independently developed product candidates are either in research or development. We must conduct a substantial amount of additional research and development before any U.S. or foreign regulatory authority will approve any of our product candidates. Limited data exist regarding the efficacy of DNA vaccines or therapeutics compared with conventional vaccines or therapeutics. Results of our research and development activities may indicate that our product candidates are unsafe or ineffective. In this case, we may stop development and regulatory authorities will not approve them. For example, in 2013 we ceased development of Allovectin^®, an investigational intratumoral cancer immunotherapy, following negative results from a Phase 3 trial.

In June 2015, we announced top-line results from an ongoing randomized, double-blind, placebo controlled Phase 1/2 clinical study of our therapeutic genital herpes vaccine, designed to reduce viral shedding and genital herpes lesions in HSV-2 infected patients. The trial enrolled patients across seven U.S. sites and evaluated a monovalent (gD) vaccine and a bivalent (gD + UL46) vaccine. Neither the monovalent nor bivalent vaccine met the primary endpoint (reduction of viral shedding from baseline). The trial is ongoing and all patients are being followed for safety for 12 months and efficacy for nine months after their final vaccine dose. During that period we will collect additional clinical efficacy data including lesion recurrence rate and lesion rate, which will enable us to determine the appropriate next steps for this program.  If the additional data is not favorable, we may be forced to cease further clinical development of this vaccine candidate and our future prospects may be harmed.

Virginia Commonwealth University holds an allowed investigational new drug application, or IND, to conduct an investigator sponsored Phase 1 clinical trial using our CyMVectin™ prophylactic vaccine formulated with our proprietary Vaxfectin^® adjuvant to prevent CMV infection during pregnancy. However, the Phase 1 clinical trial and any future trials, if any, may not demonstrate sufficient efficacy to support further product development. Because we have a limited number of independent clinical-stage product candidates, if we experience a significant delay, set-back or failure in the development of any of our product candidates, it could have a material adverse impact on our business prospects.

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Additionally, we are in early stages of development with other product candidates, including VL-2397. These product candidates will require significant costs to advance through the development stages. If such product candidates are advanced through clinical trials, the results of such trials may not support approval by the FDA or comparable foreign agencies. Even if approved, our products may not be commercially successful, particularly if they do not gain market acceptance among physicians, patients, healthcare payers and relevant medical communities. If we fail to develop and commercialize our products, we may be forced to curtail or cease operations.

(*)Our clinical trials or those of our partners may fail to demonstrate adequately the safety and efficacy of any of our product candidates, which would prevent or delay regulatory approval and commercialization.

Before obtaining regulatory approvals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target indication. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. We and our licensees have in the past suffered significant setbacks in advanced clinical trials due to lack of efficacy, notwithstanding promising results in earlier trials. For example, in 2013 we ceased development of Allovectin^®, an investigational intratumoral cancer immunotherapy, following negative results from a Phase 3 trial. In June 2015, we announced that our HSV-2 product candidates did not meet the primary endpoint in a Phase 1/2 clinical study. This may lead us to cease development of our HSV-2 product candidates. Most product candidates that commence clinical trials are never approved as products.

There are a number of factors that could cause a clinical study to fail or be delayed, including:

· the clinical study may produce negative or inconclusive results;

· regulators, monitoring boards or other entities may require that we hold, suspend or terminate clinical research for safety, ethical or regulatory reasons, including adverse events reported during the trial;

· we may decide, or regulators may require us, to conduct additional preclinical testing or clinical studies;

· enrollment in our clinical studies may be slower than we anticipate;

· the cost of our clinical studies may be greater than we anticipate; and

· the supply or quality of our product candidates or other materials necessary to conduct our clinical studies may be insufficient, inadequate or delayed.

In addition, even if clinical trials are successfully completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as sufficient to demonstrate that a product is safe and efficacious, and more trials could be required before we submit our product candidates for approval. To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, approval of our product candidates may be significantly delayed, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.

(*)We are dependent on our out-license agreements with Astellas to further develop and commercialize ASP0113. The failure to maintain these agreements, or the failure of Astellas to perform its obligations under these agreements, could negatively impact our business.

Pursuant to the terms of our out-license agreements with Astellas, we granted to Astellas exclusive worldwide rights to develop and commercialize certain products, including ASP0113 but excluding CyMVectin™, for the control and prevention of CMV infection in immunocompromised patients, including transplant recipients and transplant donors, and pursuant to the terms of our supply and services agreement with Astellas, we are obligated to perform certain development activities and supply Astellas with its product requirements for development and initial commercialization activities. Consequently, our ability to generate any revenues from ASP0113 depends on Astellas’ ability to develop, obtain regulatory approvals for and successfully commercialize ASP0113. We have limited control over the amount and timing of resources that Astellas will dedicate to these efforts.

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We are subject to a number of other risks associated with our dependence on our out-license agreements with Astellas, including:

· Astellas may not comply with applicable regulatory guidelines with respect to developing or commercializing ASP0113, which could adversely impact sales or future development of ASP0113;

· We and Astellas could disagree as to future development plans and Astellas may delay, fail to commence or stop future clinical trials or other development;

· There may be disputes between us and Astellas, including disagreements regarding the license agreements, that may result in (1) the delay of or failure to achieve developmental, regulatory and commercial objectives that would result in milestone or royalty payments, (2) the delay or termination of any future development or commercialization of ASP0113, and/or (3) costly litigation or arbitration that diverts our management’s attention and resources;

· Astellas may not provide us with timely and accurate information regarding development, sales and marketing activities or supply forecasts, which could adversely impact our ability to comply with our service and supply obligations to Astellas and manage our own inventory of ASP0113, as well as our ability to generate accurate financial forecasts;

· Business combinations or significant changes in Astellas’ business strategy may adversely affect Astellas’ ability or willingness to perform its obligations under our license agreements;

· Astellas may not properly defend our intellectual property rights, or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential litigation;

· The royalties we are eligible to receive from Astellas may be reduced based upon Astellas’ and our ability to maintain or defend our intellectual property rights and the presence of generic competitors;

· Limitations on our or an acquirer’s ability to maintain or pursue development or commercialization of products that are competitive with ASP0113 could deter a potential acquisition of us that our stockholders may otherwise view as beneficial; and

· If Astellas is unsuccessful in developing, obtaining regulatory approvals for or commercializing ASP0113, we may not receive any additional milestone or royalty payments under the license agreements and our business prospects and financial results may be materially harmed.

The out-license agreements and supply and services agreement are subject to early termination, including through Astellas’ right to terminate upon advance notice to us if Astellas reasonably determines that further development and/or commercialization will not be beneficial for Astellas. If the agreements are terminated early, we may not be able to find another collaborator for the commercialization and further development of ASP0113 on acceptable terms, or at all, and we may be unable to pursue continued development or commercialization of ASP0113 on our own.

(*)Our revenues partially depend on the development and commercialization of products in collaboration with others to whom we have licensed our technologies. If our other collaborators or licensees do not successfully develop and commercialize products covered by these arrangements, or if we are unable to find collaborators or licensees in the future, we may not be able to derive revenues from these arrangements, we may lose opportunities to validate our DNA delivery technologies, or we may be forced to curtail our development and commercialization efforts in these areas.

In addition to our out-license agreements with Astellas, we have licensed, and may continue to license, our technologies to corporate collaborators and licensees for the research, development and commercialization of specified product candidates. Our revenues partially depend upon the ability of these collaborators and licensees to successfully develop and commercialize products covered by these arrangements. In addition, our licensee Astellas has product candidates in advanced stages of clinical development, for which we believe regulatory approval would provide important further validation of our DNA delivery technologies. The development and commercialization efforts of our collaborators and licensees are subject to the same risks and uncertainties described above with respect to our independently developed product candidates.

Some collaborators or licensees may not succeed in their product development efforts. It is possible that our collaborators or licensees may be unable to obtain regulatory approval of product candidates using our technologies or successfully market and commercialize any such products for which regulatory approval is obtained. Other collaborators or licensees may not devote sufficient time or resources to the programs covered by these arrangements, and we may have limited or no control over the time or resources allocated by these collaborators or licensees to these programs. The occurrence of any of these events may cause us to derive little or no revenue from these arrangements, lose opportunities to validate our DNA delivery technologies, or force us to curtail or cease our development and commercialization efforts in these areas.

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Our collaborators and licensees may breach or terminate their agreements with us, including some that may terminate their agreements without cause at any time subject to certain prior written notice requirements, and we may be unsuccessful in entering into and maintaining other collaborative arrangements for the development and commercialization of products using our technologies. If we are unable to maintain existing collaboration arrangements or enter into new ones, our ability to generate licensing, milestone or royalty revenues would be materially impaired.

(*)Some of our independent product candidates and some of those under development by our sublicensees incorporate technologies we have licensed from others. If we are unable to retain rights to use these technologies, we or our sublicensees may not be able to market products incorporating these technologies on a commercially feasible basis, if at all.

We have licensed certain technologies from corporate collaborators and research institutions, and sublicensed certain of such technologies to others, for use in the research, development and commercialization of product candidates. Our product development efforts and those of our sublicensees partially depend upon continued access to these technologies. For example, we or our licensors may breach or terminate our agreements, or disagree on interpretations of those agreements, which could prevent continued access to these technologies. If we were unable to resolve such matters on satisfactory terms, or at all, we or our sublicensees may be unable to develop and commercialize our products, and we may be forced to curtail or cease operations.

We licensed rights to patents and know-how for VL-2397 from Astellas pursuant to an in-license agreement that contains obligations to pay Astellas regulatory and sales milestone payments relating to VL-2397, as well as royalties on net sales of VL-2397.  If we fail to make a required payment to Astellas or otherwise materially breach our in-license agreement with Astellas and do not cure the failure within the required time period, Astellas may be able to terminate the license to the VL-2397 patents and know-how, which would have a material adverse effect on our business, financial condition and results of operations.

(*)We have a history of net losses. We expect to continue to incur net losses and we may not achieve or maintain profitability.

To date, we have not sold, or received approval to sell, any pharmaceutical products. We do not expect to sell any pharmaceutical products for at least the next several years. Our net losses were approximately $16.5 million, $31.2 million and $22.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. As of September 30, 2015, we had incurred cumulative net losses totaling approximately $402.6 million. Moreover, we expect that our net losses will continue and may increase for the foreseeable future. We may not be able to achieve projected results if we generate lower revenues or receive lower investment income than expected, or we incur greater expenses than expected, or all of the above. Currently our revenues are largely dependent on manufacturing and research services performed under our license agreement with Astellas. That revenue may decrease once the ASP0113 trials are complete or in the event that the development of the ASP0113 program ceases.  We may never generate sufficient product revenue to become profitable. We also expect to have quarter-to-quarter fluctuations in revenues, expenses, and losses, some of which could be significant.

(*)We may need additional capital in the future. If additional capital is not available, we may have to curtail or cease operations.

We may need to raise more money to continue the research and development necessary to bring our products to market and to establish marketing and additional manufacturing capabilities. We may seek additional funds through public and private stock offerings, government contracts and grants, arrangements with corporate collaborators, borrowings under lines of credit or other sources. We currently have on file a shelf registration statement that allows us to raise up to an aggregate of $100.0 million from the sale of common stock, preferred stock, debt securities and/or warrants. However, we may not be able to raise additional funds on favorable terms, or at all. Conditions in the credit markets and the financial services industry may make equity and debt financing more difficult to obtain, and may negatively impact our ability to complete financing transactions. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants, such as limitations on our ability to incur additional indebtedness and other operating restrictions that could adversely impact our ability to conduct our business.

If we are unable to obtain additional funds, we may have to scale back our development of new products, reduce our workforce or license to others products or technologies that we otherwise would seek to commercialize ourselves. The amount of money we may need would depend on many factors, including:

· The progress of our research and development programs;

· The scope and results of our preclinical studies and clinical trials;

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· The amount of our legal expenses, including those expenses associated with the shareholder class action filed against us and certain of our current and former officers and any settlement or damages payments associated with litigation; and 

· The time and costs involved in: obtaining necessary regulatory approvals; filing, prosecuting and enforcing patent claims; scaling up our manufacturing capabilities; and the commercial arrangements we may establish.

The regulatory approval process is expensive, time consuming and uncertain, which may prevent us and our collaborators and licensees from obtaining required approvals for the commercialization of our products.

Our product candidates under development and those of our collaborators and licensees, including Astellas, are subject to extensive and rigorous regulations by numerous governmental authorities in the United States and other countries. The regulatory approval process takes many years and will require us to expend substantial resources.

U.S. or foreign regulations evolve and could prevent or delay regulatory approval of our products or limit our and our collaborators and licensees’ ability to develop and commercialize our products. Delays could:

· Impose costly procedures on our activities and those of our collaborators and licensees;

· Delay or prevent our receipt of developmental or commercial milestones from our collaborators and licensees;

· Diminish any competitive advantages that we or our products attain; or

· Otherwise negatively affect our results of operations and cash flows.

We have no experience in filing a Biologics License Application, or BLA, or a New Drug Application, or NDA, with the FDA. Because these applications must be submitted to and approved by the FDA before any of our product candidates may be commercialized, our lack of experience may impede our ability to obtain FDA approval in a timely manner, if at all, which in turn would delay or prevent us from commercializing those products. Similarly, our lack of experience with respect to obtaining regulatory approvals in countries other than the United States may impede our ability to commercialize our products in those countries.

The FDA and comparable foreign regulatory bodies will regulate separately each product containing a particular gene depending on its intended use. Presently, to commercialize any product we and our collaborators and licensees must file a regulatory application for each proposed use. We and our collaborators and licensees must conduct clinical studies to demonstrate the safety and efficacy of the product necessary to obtain FDA or foreign regulatory authority approval. The results obtained so far in our clinical trials and those of our collaborators and licensees may not be replicated in ongoing or future trials, or the results may be subject to varying interpretation on whether they are sufficient to support approval for commercialization. This may prevent any of our product candidates from receiving approval for commercial sale.

We anticipate that we would commercially manufacture any of our product candidates that are approved for marketing. Therefore, our manufacturing facilities will have to be approved by the FDA pursuant to inspections conducted after we submit an application for regulatory approval. If we cannot successfully manufacture material that conforms to applicable specifications and the strict regulatory requirements of the FDA, we will not be able to secure and/or maintain regulatory approval for our manufacturing facilities. If the FDA does not approve our facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, our ability to develop, obtain regulatory approval for or market our product candidates will be adversely affected.

If any of our product candidates receive regulatory approval, the FDA or other foreign regulatory agencies may still impose significant restrictions on the indicated uses or marketing of our product candidates or impose ongoing requirements for potentially costly post-approval studies. In addition, regulatory agencies subject a product, its manufacturer and the manufacturer’s facilities to continual review and periodic inspections. If a regulatory agency discovers previously unknown problems with a product or a product class, including adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product or product class, our collaborators and licensees or us, including requiring withdrawal of a product from the market. Our product candidates will also be subject to ongoing FDA and other foreign regulatory agency requirements for the labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the product. If we or our collaborators and licensees fail to maintain regulatory compliance after receiving marketing approval, we or our collaborators and licensees may be unable to market our products and our business could suffer.

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Adverse events or the perception of adverse events in the field of gene therapy, or with respect to our product candidates, may negatively impact regulatory approval or public perception of our products.

The commercial success of some of our product candidates will depend in part on public acceptance of the use of gene therapy for preventing or treating human diseases. Serious adverse events, including patient deaths, have occurred in clinical trials utilizing viral delivery systems to deliver therapeutic genes to the patient’s targeted cells. Although none of our current products or studies utilize viral delivery systems, these adverse events, as well as any other adverse events in the field of gene therapy that may occur in the future, may negatively influence public perception of gene therapy in general. If public perception is influenced by claims that gene therapy is unsafe, our product candidates may not be accepted by the general public or the medical community.

Future adverse events in gene therapy or the biotechnology industry could also result in greater governmental regulation, stricter labeling requirements and potential regulatory delays in the testing or approval of our potential products. Any increased scrutiny could delay or increase the costs of our product development efforts or clinical trials. In addition, any adverse events that may occur in our clinical trials and any resulting publicity may cause regulatory delays or otherwise affect our product development efforts or clinical trials.

Some of our potential products may be administered to patients who are suffering from, or are vulnerable to, serious diseases or other conditions which can themselves be life-threatening and often result in the death of the patient. Patient deaths in our clinical trials, even if caused by pre-existing diseases or conditions, could negatively affect the perception of our product candidates. In addition, although we do not believe our vaccine candidates could cause the diseases they are designed to protect against, a temporal relationship between vaccination and disease onset could be perceived as causal. Some of our products are designed to stimulate immune responses, and those responses, if particularly strong or uncontrolled, could result in local or systemic adverse events, including latent adverse events.

(*)Our patents and proprietary rights may not provide us with any benefit and the patents of others may prevent us from commercializing our products.

As of September 30, 2015, we were the assignee or co-assignee of 54 issued U.S. and foreign patents. We maintain our issued patents by paying maintenance fees to the patent office in each country when due. Where appropriate, we participate in legal proceedings to vigorously defend against the revocation or withdrawal of our patents. The scope and nature of these proceedings generally differ depending on the country in which they are initiated. If we are not successful in defending our patents, we may lose all or part of our proprietary rights related to those patents in these geographic regions.

As of September 30, 2015, we were also prosecuting 14 pending patent applications in the United States and in foreign countries that cover various aspects of our proprietary technologies, not including patent applications for which we are a co-assignee and that are being prosecuted by our partners.

We may not receive any patents from our current patent applications. Issued patents provide exclusivity for only a limited time period, after which they no longer serve to protect proprietary technologies or to provide any commercial advantage. Moreover, if patents are issued to us, governmental authorities may not allow claims sufficient to protect our technologies and products. Others may also challenge or seek to circumvent or invalidate our patents. In that event, the rights granted under our patents may be inadequate to protect our proprietary technologies or to provide any commercial advantage.

In addition, the Leahy-Smith America Invents Act, or AIA, was signed into law on September 16, 2011, and significantly changed certain aspects of the United States patent laws. These changes include, but are not limited to, authorizing fee setting authority to the United States Patent Office, transitioning the United States to a first-inventor-to-file patent system, expanding the scope of prior art that may be utilized against a pending patent application, and adding post-patent grant proceedings before the Patent Office in which third parties may challenge the validity of the granted patent. It is not clear, what, if any, impact the AIA will have on the cost of prosecuting our patent applications, our ability to obtain patents based on our patent applications, and our ability to enforce or defend our issued or granted United States patents. An inability to obtain, enforce, and defend patents covering our proprietary technologies would materially and adversely affect our business prospects and financial condition.

Some components of our gene-based product candidates are, or may become, patented by others. As a result, we may be required to obtain licenses to conduct research, to manufacture, or to market such products. Licenses may not be available on commercially reasonable terms, or at all, which may impede our ability to commercialize our products.

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The legal proceedings to obtain and defend patents, and litigation of third-party claims of intellectual property infringement, could require us to spend money and could impair our operations.

Our and our collaborators’, including Astellas’, success will depend in part on our, or our collaborators’, ability to obtain patent protection for our products and processes, both in the United States and in other countries. The patent positions of biotechnology and pharmaceutical companies, however, can be highly uncertain and involve complex legal and factual questions. Therefore, it is difficult to predict the breadth of claims allowed in the biotechnology and pharmaceutical fields.

We also rely on confidentiality agreements with our corporate collaborators, employees, consultants and certain contractors to protect our proprietary technologies. However, these agreements may be breached and we may not have adequate remedies for such breaches. In addition, our trade secrets may otherwise become known or independently discovered by our competitors.

Protecting intellectual property rights can be very expensive. Litigation may be necessary to enforce patents issued to us or to determine the scope and validity of third-party proprietary rights. If we or, as applicable, our commercialization partners, including Astellas pursuant to its first right to enforce patents licensed to it under our license agreements, choose to go to court to stop someone else from using our inventions, that individual or company has the right to ask the court to rule that the underlying patents are invalid and/or should not be enforced against that third party. Moreover, if a competitor were to file a patent application claiming technology also invented by us or our collaborators or licensees, we would have to participate in an interference proceeding before the U.S. Patent and Trademark Office to determine the priority of the invention. We or our collaborators or licensees may be drawn into interferences with third parties or may have to provoke interferences ourselves to unblock third-party patent rights to allow us or our collaborators or licensees to commercialize products based on our technologies. Litigation could result in substantial costs and the diversion of management’s efforts regardless of the results of the litigation. An unfavorable result in litigation could subject us to significant liabilities to third parties, require disputed rights to be licensed or require us to cease using some technologies.

Our products and processes may infringe, or be found to infringe, patents not owned or controlled by us. Patents held by others may require us to alter our products or processes, obtain licenses, or stop activities. If relevant claims of third-party patents are upheld as valid and enforceable, we or our collaborators or licensees could be prevented from practicing the subject matter claimed in the patents, or may be required to obtain licenses or redesign our products or processes to avoid infringement. In addition, we or our collaborators or licensees could be required to pay money damages. A number of genetic sequences or proteins encoded by genetic sequences that we are investigating are, or may become, patented by others. As a result, we or our collaborators or licensees may have to obtain licenses to test, use or market these products. Our business will suffer if we or our collaborators or licensees are not able to obtain licenses at all or on terms commercially reasonable to us or them and we or they are not able to redesign our products or processes to avoid infringement.

We have incurred costs in several legal proceedings involving our intellectual property rights in Europe, Japan and Canada. We may continue to incur costs to defend and prosecute patents and patent applications in these and other regions.

Competition and technological change may make our product candidates and technologies less attractive or obsolete.

We compete with companies, including major pharmaceutical and biotechnology firms that are pursuing other forms of treatment or prevention for diseases that we target. We also may experience competition from companies that have acquired or may acquire technologies from universities and other research institutions. As these companies develop their technologies, they may develop proprietary positions which may prevent us from successfully commercializing products.

Some of our competitors are established companies with greater financial and other resources than we have. Other companies may succeed in developing products and obtaining regulatory approval from the FDA or comparable foreign agencies faster than we do, or in developing products that are more effective than ours. Research and development by others may seek to render our technologies or products obsolete or noncompetitive or result in treatments or cures superior to any therapeutics developed by us.

The internet site ClinicalTrials.gov provides public access to information on clinical trials and their results for a wide range of diseases and conditions. Future disclosures of such confidential commercial information may result in loss of advantage of competitive secrets.

If we lose our key personnel or are unable to attract and retain additional personnel, we may not be able to achieve our business objectives.

We are highly dependent on our principal scientific, manufacturing, clinical, regulatory and management personnel, including Vijay B. Samant, our President and Chief Executive Officer. The loss of the services of these individuals might significantly delay or prevent the achievement of our objectives. We do not maintain “key person” life insurance on any of our personnel. We depend on our

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continued ability to attract, retain and motivate highly qualified management and scientific personnel. We face competition for qualified individuals from other companies, academic institutions, government entities and other organizations in attracting and retaining personnel. To pursue our product development plans, we may need to hire additional management personnel and additional scientific personnel to perform research and development, as well as additional personnel with expertise in clinical trials, government regulation and manufacturing. However, due to the reasons noted above, we may not be successful in hiring or retaining qualified personnel and therefore we may not be able to achieve our business objectives.

We have limited experience in manufacturing our product candidates in commercial quantities. We may not be able to comply with applicable manufacturing regulations or produce sufficient product for contract or commercial purposes.

The commercial manufacturing of vaccines and other biological products is a time-consuming and complex process, which must be performed in compliance with the FDA’s current Good Manufacturing Practices, or cGMP, regulations. We may not be able to comply with the cGMP regulations, and we have in the past encountered and may in the future encounter delays, disruptions or quality control problems in our manufacturing process. In addition, we may need to complete the installation and validation of additional large-scale fermentation and related purification equipment to produce the quantities of product expected to be required for commercial purposes. We have limited experience in manufacturing at this scale. We will also depend on third parties for any commercial scale filling of product vials. Noncompliance with the cGMP regulations, the inability to complete the installation or validation of additional large-scale equipment, or other problems with our manufacturing process may limit or delay the development or commercialization of our product candidates, and cause us to breach our contract manufacturing service arrangements or our obligations under our agreements with collaborators, including our obligations under our supply and services agreement with Astellas.

We currently depend on third parties to conduct our clinical trials and may initially depend on third parties to manufacture our product candidates commercially.

We rely on third parties, including clinical research organizations, medical institutions and contract laboratories, to perform critical services for us in connection with our clinical trials. These third parties are responsible for many aspects of the trials, including finding and enrolling subjects for testing and administering the trials. Although we rely on these third parties to conduct our clinical trials, we are responsible for ensuring that each of our clinical trials is conducted in accordance with its protocol and applicable regulations, including good clinical practices established by the FDA and foreign regulatory authorities, which govern the conduct, monitoring, recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate, and that trial subjects are adequately informed of the potential risks associated with participating in clinical trials. Our reliance on third parties does not relieve us of the responsibility to ensure these requirements are met. These third parties may not comply with all regulatory and contractual requirements or may not otherwise perform their services in a timely or acceptable manner, and we may need to enter into new arrangements with alternative third parties and our clinical trials may be extended, delayed or terminated. In addition, if such third parties fail to perform their obligations in compliance with our clinical trial protocols or applicable good clinical practice regulations, our clinical trials may not meet regulatory requirements or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the product candidate being tested in such trials. These risks also apply to the development activities of our collaborators and licensees, and we do not control our collaborators’ and licensees’ research and development, clinical trials or regulatory activities.

We may also initially depend on collaborators, licensees or other third parties to manufacture our product candidates in commercial quantities. There are a limited number of third parties that could manufacture our product candidates. We may be unable to enter into any arrangement for the commercial manufacture of our product candidates, and any arrangement we secure may not meet our requirements for manufacturing quality or quantity. Our dependence on third parties for the commercial manufacture of our product candidates may also reduce our profit margins and our ability to develop and deliver products in a timely manner.

We have no marketing or sales experience, and if we are unable to develop our own sales and marketing capability, we may not be successful in commercializing our products.

Our current strategy is to market our proprietary products directly in the United States, but we currently do not possess pharmaceutical marketing or sales capabilities. To market and sell our proprietary products, we will need to develop a sales force and a marketing group with relevant pharmaceutical industry experience, or make appropriate arrangements with strategic partners to market and sell these products. Developing a marketing and sales force is expensive and time-consuming and could delay any product launch. If we are unable to successfully employ qualified marketing and sales personnel or develop other sales and marketing capabilities, we may not be able to generate sufficient product revenue to become profitable.

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Healthcare reform and restrictions on reimbursement may limit our returns on potential products.

Our ability to earn sufficient returns on our products will depend in part on how much, if any, reimbursement for our products and related treatments will be available from:

· Government health administration authorities;

· Government agencies procuring biodefense products for military or public use, including some for which we may become a sole-source vendor;

· Private health coverage insurers;

· Managed care organizations; and

· Other organizations.

If we fail to obtain appropriate reimbursement, we could be prevented from successfully commercializing our potential products. There are ongoing efforts by governmental and third-party payers to contain or reduce the costs of healthcare through various reform measures. In the United States, the Federal government passed comprehensive healthcare reform legislation in 2010. Many of the details regarding the implementation of this legislation are yet to be determined and we currently cannot predict whether or to what extent such implementation or adoption of reforms may impair our business.

Additionally, third-party payers are increasingly challenging the price of medical products and services. If purchasers or users of our products are not able to obtain adequate reimbursement for the cost of using our products, they may forego or reduce their use. Significant uncertainty exists as to the reimbursement status of newly approved healthcare products, and whether adequate third-party coverage will be available.

We use hazardous materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly.

Our research and development processes involve the controlled storage, use and disposal of hazardous materials and biological materials. Our hazardous materials include certain compressed gases, flammable liquids, acids and bases, and other toxic compounds. We are subject to federal, state and local regulations governing the use, manufacture, storage, handling and disposal of materials and waste products. Although we believe that our safety procedures for handling and disposing of these hazardous materials comply with the standards prescribed by law and regulation, the risk of accidental contamination or injury from hazardous materials cannot be completely eliminated. In the event of an accident, we could be held liable for any damages that result. We could incur significant costs to comply with current or future environmental laws and regulations.

We may have significant product liability exposure.

We face an inherent business risk of exposure to product liability and other claims in the event that our technologies or products are alleged to have caused harm. We also have potential liability for products manufactured by us on a contract basis for third parties. Although we currently maintain product liability insurance in the amount of $10 million in the aggregate plus additional coverage specific to the foreign countries where our clinical trials are being conducted, this insurance coverage may not be sufficient, and we may not be able to obtain sufficient coverage in the future at a reasonable cost. Our inability to obtain product liability insurance at an acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of any products developed by us or our collaborators, or our ability to manufacture products for third parties. If we are sued for any injury caused by our technologies or products, or by third-party products that we manufacture, our liability could exceed our insurance coverage and total assets.

(*)Negative conditions in the global credit markets may impair the liquidity of a portion of our investment portfolio.

Our investment securities consist of auction rate securities, corporate debt securities and government agency securities. As of September 30, 2015, our long-term investments included a (at par value) $2.5 million auction rate security secured by municipal bonds. At September 30, 2015, the auction rate security we held maintained a Standard and Poor’s credit rating of A-. Our auction rate security is a debt instrument with a long-term maturity and with an interest rate that is reset in short intervals through auctions. The conditions in the global credit markets have prevented some investors from liquidating their holdings of auction rate securities because the amount of securities submitted for sale has exceeded the amount of purchase orders for such securities. If there is insufficient demand for the securities at the time of an auction, the auction may not be completed and the interest rates may be reset to predetermined higher rates. When auctions for these securities fail, the investments may not be readily convertible to cash until a future auction of these investments is successful or they are redeemed or mature.

29

Since February 2008, there has been insufficient demand at auction for our auction rate security held at September 30, 2015. As a result, this security is currently not liquid, and we could be required to hold it until it is redeemed by the issuer or to maturity. As of September 30, 2015, we had recognized $0.5 million of losses related to the auction rate security. The market value of the security has partially recovered from the lows that created the losses. As of September 30, 2015, we had recorded cumulative unrealized gains of $0.3 million. Any future decline in market value may result in additional losses being recognized.

In the event we need to access the funds that are in an illiquid state, we will not be able to do so without the possible loss of principal, until a future auction for this investment is successful or it is redeemed by the issuer or it matures. If we are unable to sell this security in the market or it is not redeemed, then we may be required to hold it to maturity.

(*)Our stock price could continue to be highly volatile and you may not be able to resell your shares at or above the price you pay for them.

The market price of our common stock, like that of many other life sciences companies, has been and is likely to continue to be highly volatile. From January 1, 2012, to September 30, 2015, our stock price has ranged from $0.42 to $4.74. The following factors, among others, could have a significant impact on the market price of our common stock:

· The results of our preclinical studies and clinical trials or announcements regarding our plans for future studies or trials, or those of our collaborators, licensees or competitors;

· Evidence or lack of evidence of the safety or efficacy of our potential products or those of our collaborators, licensees or competitors;

· The success of our collaborators and licensees, including Astellas, in the development or commercialization of our product candidates;

· The announcement by us or our collaborators, licensees or competitors of technological innovations or new products;

· Developments concerning our patent or other proprietary rights or those of our collaborators, licensees or competitors, including litigation and challenges to our proprietary rights;

· Other developments with our collaborators or licensees, including our entry into new collaborative or licensing arrangements;

· Geopolitical developments, natural or man-made disease threats, or other events beyond our control;

· U.S. and foreign governmental regulatory actions;

· Changes or announcements in reimbursement policies;

· Period-to-period fluctuations in our operating results;

· Market conditions for life science stocks in general;

· Changes in the collective short interest in our stock;

· Changes in estimates of our performance by securities analysts; and

· Our cash balances, need for additional capital, and access to capital.

(*)We and certain of our current and former officers have been named as defendants in two securities class action lawsuits and we are at risk of future securities class action litigation due to our past and expected stock price volatility.

In the past, stockholders have brought securities class action litigation against a company following a decline in the market price of its securities. This risk is especially acute for us because life science companies have experienced greater than average stock price volatility in recent years and, as a result, have been subject to, on average, a greater number of securities class action claims than companies in other industries. Even if such claims are not successful, any litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on our business, operating results or financial condition.

(*)If we fail to continue to meet all applicable Nasdaq Global Select Market requirements, Nasdaq may delist our common stock, which could have an adverse impact on the liquidity and market price of our common stock.

Our common stock is currently listed on The Nasdaq Global Select Market, which has qualitative and quantitative listing criteria. On August 5, 2015, we received a letter from The Nasdaq Stock Market indicating that for 30 consecutive business days our

30

common stock had not maintained a minimum closing bid price of $1.00, or Minimum Bid Price Requirement, per share as required by Nasdaq Listing Rule 5550(a)(2).  This notice of noncompliance has had no immediate impact on the continued listing or trading of our common stock on the Nasdaq Global Select Market.Under Nasdaq Listing Rule 5810(c)(3)(A), if during the 180 calendar days following the date of the notification, or the Compliance Period, ending on February 1, 2016, the closing bid price of our stock is at or above $1.00 for a minimum of ten consecutive business days, we will regain compliance with the Minimum Bid Price Requirement and our common stock will continue to be eligible for listing on the Nasdaq GlobalSelect Market.

If we do not achieve compliance with the Minimum Bid Price Requirement by the end of the Compliance Period, under Nasdaq Listing Rule 5810(c)(3)(A)(ii), if on the last day of the Compliance Period, we are in compliance with the market value requirement for continued listing of our common stock on the Nasdaq Capital Market as well as all other listing standards for initial listing of our common stock on the Nasdaq Capital Market (other than the Minimum Bid Price Requirement), and we provide written notice of our intention to cure the deficiency during a second compliance period, Nasdaq may grant us an additional Compliance Period through July 30, 2016.

While we intend to monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to regain compliance with the Minimum Bid Price Requirement under the Nasdaq Listing Rules, if we are unable to meet any of the Nasdaq listing requirements in the future, including the Minimum Bid Price Requirement during any Compliance Period, Nasdaq could determine to delist our common stock, which could adversely affect the market liquidity of our common stock and the market price of our common stock could decrease. A delisting of our common stock could also adversely affect our ability to obtain financing for the continuation of our operations and could result in the loss of confidence in our company.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Our certificate of incorporation and bylaws include anti-takeover provisions, such as a classified board of directors, a prohibition on stockholder actions by written consent, the authority of our board of directors to issue preferred stock without stockholder approval, and supermajority voting requirements for specified actions. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits stockholders owning in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years. These provisions may delay or prevent an acquisition of us, even if the acquisition may be considered beneficial by some stockholders. In addition, they may discourage or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

(*)The issuance of preferred stock could adversely affect our common stockholders.

We currently have on file a shelf registration statement that allows us to raise up to an aggregate of $100.0 million from the sale of common stock, preferred stock, debt securities and/or warrants and our restated certificate of incorporation authorizes us to issue up to 5,000,000 shares of preferred stock. The issuance of preferred stock could adversely affect the voting power of holders of our common stock, and reduce the likelihood that our common stockholders will receive dividend payments and payments upon liquidation. The issuance of preferred stock could also decrease the market price of our common stock, or have terms and conditions that could discourage a takeover or other transaction that might involve a premium price for our shares or that our stockholders might believe to be in their best interests.

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ITEM 6.EXHIBITS

Exhibit Number	Description of Document
3.1(i)(1)	Restated Certificate of Incorporation.
3.2(ii)(2)	Amended and Restated Bylaws.
3.3(i)(2)	Certificate of Amendment to Restated Certificate of Incorporation.
4.1(1)	Specimen Common Stock Certificate.
10.1(*)	Amendment No. 1 dated August 31, 2015 to License Agreement dated March 24, 2015, between the Company and Astellas Pharma Inc.
31.1	Certification of Vijay B. Samant, Chief Executive Officer and acting Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Vijay B. Samant, Chief Executive Officer and acting Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

(1) Incorporated by reference to the exhibit of the same number filed with the Company’s Registration Statement on Form S-3 (No. 33-95812) filed on August 15, 1995.

(2) Incorporated by reference to the exhibit of the same number filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.

(*) Confidential treatment of certain portions of this agreement has been requested and/or received and such portions have been omitted and filed separately with the SEC pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	Vical Incorporated
Date:  October 30, 2015	By:	/s/ ANTHONY A. RAMOS
		Anthony A. Ramos
		VP Finance, Chief Accounting Officer (on behalf of the registrant and as the registrant’s Principal Accounting Officer)

33

EX-10.1

Exhibit 10.1

AMENDMENT No.1

This AmendmentNo.1 (the “Amendment”), dated as of 31^st of August 2015, is by and between Vical Incorporated, a Delaware corporation (“Vical”), having an address of 10390 Pacific Center Court, San Diego, California, 92121, USA, and Astellas Pharma Inc., a company organized under the laws of Japan (“Astellas”), having an address of 5-1, Nihonbashi-Honcho 2-chome, Chuo-ku, Tokyo 103-8411, Japan.

WHEREAS, Vical and Astellas (collectively, the “Parties”) entered into a License Agreement for ASP2397, dated as of March 24, 2015 (the “Original Agreement”); and

WHEREAS, the Parties now desire to amend the payment terms and conditions of the Original Agreement for the first milestone event which shall be triggered by […***…] as set forth in Section 4.2 of the Original Agreement.

NOW, THEREFORE, in consideration of the premises and mutual agreements set forth herein, the Parties agree to amend the Original Agreement as follows:

1.Definitions.  Capitalized terms used herein and not otherwise defined in this Amendment shall have the meanings ascribed to them in the Original Agreement.

2.New Section 1.35.The following definition shall be added to the Original Agreement as new Section 1.35, and the remaining Sections of Article 1 shall be renumbered accordingly;

“1.35  “Phase I Clinical Trial” shall mean a clinical trial of a Product in humans that would provide for first testing of a Product in humans and would satisfy the requirements of 21 C.F.R. §312.21(a) or analogous regulatory requirements in the Territory.”

3.     Amendment to Section 4.2(i) of the Original Agreement.Vical shall pay to Astellas the first non-refundable, non-creditable milestone payment of […***…] under Section 4.2(i) of the Original Agreement within thirty (30) days after the occurrence of either of:

(A) […***…]; or

(B) […***…];

Provided, however, that, if the […***…] has occurred before […***…] and Vical shall pay to Astellas the first milestone payment within […***…] therefrom.

***Text Omitted and Filed Separately with the Securities and Exchange Commission.

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

4.     Except as set forth herein, the terms and conditions of the Original Agreement shall remain in full force and effect.  For the avoidance of doubt, the amendment to Section 4.2(i) under Clause 3 above shall not amend the other sub-sections of Section 4.2 of the Original Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment by their duly authorized representatives on the date first above written.

Vical Incorporated

By: /s/ VIJAY B. SAMANT

Name:  Vijay Samant

Title:  President and Chief Executive Officer

Astellas Pharma Inc.

By:/s/NAOKI OKAMURA

Name:Naoki Okamua

Title: Vice President, Business Development

***Text Omitted and Filed Separately with the Securities and Exchange Commission.

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Vijay B. Samant, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Vical Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 30, 2015

By:	/s/ VIJAY B. SAMANT
	Vijay B. Samant
	Chief Executive Officer and Acting Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), Vijay B. Samant, the Chief Executive Officer and Acting Chief Financial Officer of Vical Incorporated (the “Company”), hereby certifies that, to the best of his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Periodic Report and results of operations of the Company for the period covered by the Periodic Report.

Dated: October 30, 2015

/s/ VIJAY B. SAMANT

Vijay B. Samant

Chief Executive Officer and

Acting Chief Financial Officer

This certification "accompanies" the FORM 10-Q TO WHICH IT RELATES, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the fORM 10-q), irrespective of any general incorporation language contained in such filing. A signed original of this certification has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Other Balance Sheet Accounts - Summary of Accounts Payable and Accrued Expenses (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Payables And Accruals [Abstract]
Employee compensation	$ 1,850	$ 2,471
Clinical trial accruals	206	1,686
Accounts payable	316	227
Deferred rent	480	432
Other accrued liabilities	512	385
Total accounts payable and accrued expenses	$ 3,364	$ 5,201

XML

Marketable Securities, Available for Sale

9 Months Ended

Sep. 30, 2015

Investments Debt And Equity Securities [Abstract]

Marketable Securities, Available for Sale

3. MARKETABLE SECURITIES, AVAILABLE FOR SALE

The following is a summary of available-for-sale marketable securities (in thousands):

September 30, 2015	Amortized Cost		Unrealized Gain		Unrealized Loss		Market Value
U.S. treasuries	$	5,030	$	5	$	—	$	5,035
Government-sponsored enterprise securities		2,000		—		—		2,000
Corporate bonds		2,005		—		—		2,005
Certificates of deposit		10,824		—		—		10,824
	$	19,859	$	5	$	-	$	19,864

December 31, 2014	Amortized Cost		Unrealized Gain		Unrealized Loss		Market Value
U.S. treasuries	$	5,558	$	—	$	1	$	5,557
Government-sponsored enterprise securities		7,499		—		6		7,493
Corporate bonds		2,025		—		5		2,020
Certificates of deposit		8,429		—		—		8,429
	$	23,511	$	-	$	12	$	23,499

At September 30, 2015, $0.5 million of these securities were scheduled to mature outside of one year. The Company did not realize any gains or losses on sales of available-for-sale securities for the nine months ended September 30, 2015. As of September 30, 2015, none of the securities had been in a continuous material unrealized loss position longer than one year.

XML

Commitments and Contingencies - Additional Information (Detail)	Nov. 30, 2013 Lawsuit
Commitments And Contingencies Disclosure [Abstract]
Number of putative, securities class action complaints filed in U.S District Court	2

XML

Fair Value Measurements - Summary of Activity for Assets Measured at Fair Value Using Significant Unobservable Inputs (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Fair Value Disclosures [Abstract]
Balance at December 31, 2014	$ 1,971
Total unrealized gains, excluding tax impact, included in other comprehensive loss	106
Balance at September 30, 2015	2,077
Total gains or losses for the period included in net loss attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$ 0

XML

Astellas Out-License Agreements - Additional Information (Detail) - Collaborative Arrangement [Member] - Astellas Out-License Agreements [Member] - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue related to contract services	$ 4.4	$ 3.0	$ 12.4	$ 9.1
Recognized license revenue			$ 1.5	$ 1.1

XML

Astellas In-License Agreements - Additional Information (Detail) - USD ($)	1 Months Ended	9 Months Ended
	Mar. 31, 2015	Sep. 30, 2015	Sep. 30, 2014
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Purchase of technology license with common stock		$ 775,000	$ 0
Astellas In-License Agreements [Member] | Collaborative Arrangement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Restricted stock issued, shares	861,216
Potential future milestone payments		100,000,000
Astellas In-License Agreements [Member] | Collaborative Arrangement [Member] | Research and development [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Cash payment for license agreement	$ 250,000
Purchase of technology license with common stock		$ 775,094

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

2. STOCK-BASED COMPENSATION

Total stock-based compensation expense was allocated to research and development, manufacturing and production and general and administrative expense as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Research and development	$	93	$	186	$	309	$	628
Manufacturing and production		42		56		123		177
General and administrative		302		488		1,102		1,646
Total stock-based compensation expense	$	437	$	730	$	1,534	$	2,451

During the nine months ended September 30, 2015 and 2014, the Company granted stock-based awards with a total estimated value of $1.9 million and $2.3 million, respectively. At September 30, 2015, total unrecognized estimated compensation expense related to unvested stock-based awards granted prior to that date was $1.7 million, which is expected to be recognized over a weighted-average period of 1.4 years. Stock-based awards granted during the nine months ended September 30, 2015 and 2014, were equal to 3.3% and 3.0%, respectively, of the outstanding shares of common stock at the end of the applicable period.

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Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 18,741	$ 20,471
Marketable securities, available-for-sale	19,864	23,499
Restricted cash	3,246	3,182
Receivables and other assets	5,769	4,178
Total current assets	47,620	51,330
Long-term investments	2,077	1,971
Property and equipment, net	2,010	2,639
Intangible assets, net	1,522	1,660
Other assets	191	379
Total assets	53,420	57,979
Current liabilities:
Accounts payable and accrued expenses	3,364	5,201
Deferred revenue	2,110	0
Total current liabilities	5,474	5,201
Long-term liabilities:
Deferred rent	$ 494	$ 856
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000 shares authorized, none issued and outstanding	$ 0	$ 0
Common stock, $0.01 par value, 160,000 shares authorized, 91,513 and 90,334 shares issued and outstanding at September 30, 2015, and December 31, 2014, respectively	915	903
Additional paid-in capital	448,976	446,698
Accumulated deficit	(402,550)	(395,667)
Accumulated other comprehensive income (loss)	111	(12)
Total stockholders' equity	47,452	51,922
Total liabilities and stockholders' equity	$ 53,420	$ 57,979

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Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net loss	$ (6,883)	$ (11,859)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	884	1,330
Write-off of abandoned patents	50	331
Loss on sale of property and equipment	2	0
Compensation expense related to stock options and awards	1,534	2,451
Purchase of technology license with common stock	775	0
Changes in operating assets and liabilities:
Receivables and other assets	(1,403)	(99)
Accounts payable and accrued expenses	(1,885)	1,050
Deferred revenue	2,110	(113)
Deferred rent	(313)	(266)
Net cash used in operating activities	(5,129)	(7,175)
Cash flows from investing activities:
Maturities of marketable securities	15,030	8,000
Purchases of marketable securities	(11,500)	(20,437)
Purchases of property and equipment	(58)	(43)
Patent expenditures	(53)	(240)
Net cash provided by (used in) investing activities	3,419	(12,720)
Cash flows from financing activities:
Net proceeds from issuance of common stock	3	3,776
Payment of withholding taxes for net settlement of restricted stock units	(23)	(58)
Net cash (used in) provided by financing activities	(20)	3,718
Net decrease in cash and cash equivalents	(1,730)	(16,177)
Cash and cash equivalents at beginning of period	20,471	38,837
Cash and cash equivalents at end of period	$ 18,741	$ 22,660

XML

Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Estimated value of stock-based awards, granted	$ 1.9	$ 2.3
Unrecognized compensation cost related to unvested options	$ 1.7
Unvested stock-based awards expected to be recognized, weighted-average period	1 year 4 months 24 days
Portion of stock-based awards granted from outstanding common shares	3.30%	3.00%

XML

Marketable Securities, Available for Sale - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2015 USD ($)
Investments Debt And Equity Securities [Abstract]
Available-for-sale securities maturing outside of one year	$ 500,000
Realized gains or losses on sales of available-for-sale securities	0
Available-for-sale securities in a continuous material unrealized loss position longer than one year	$ 0

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Basis of Presentation

1. BASIS OF PRESENTATION

Vical Incorporated, or the Company, a Delaware corporation, was incorporated in April 1987 and has devoted substantially all of its resources since that time to its research and development programs. The Company researches and develops biopharmaceutical products, including those based on its patented DNA delivery technologies, for the prevention and treatment of serious or life-threatening diseases.

All of the Company’s potential products are in research and development phases. No revenues have been generated from the sale of any such products, nor are any such revenues expected for at least the next several years. The Company earns revenue from research and development agreements with pharmaceutical collaborators and grant and contract arrangements with government entities. Most of the Company’s product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing. All product candidates that advance to clinical testing will require regulatory approval prior to commercial use, and will require significant costs for commercialization. There can be no assurance that the Company’s research and development efforts, or those of its collaborators, will be successful. The Company expects to continue to incur substantial losses and not generate positive cash flows from operations for at least the next several years. No assurance can be given that the Company can generate sufficient product revenue to become profitable or generate positive cash flows from operations.

The unaudited financial statements at September 30, 2015, and for the three and nine months ended September 30, 2015 and 2014, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC, and with accounting principles generally accepted in the United States applicable to interim financial statements. These unaudited financial statements have been prepared on the same basis as the audited financial statements included in the Company’s Annual Report on Form 10-K and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented. Interim results are not necessarily indicative of results expected for a full year or future periods. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. These unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2014, included in its Annual Report on Form 10-K filed with the SEC.

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents consist of cash and highly liquid securities with original maturities at the date of acquisition of ninety days or less and can be liquidated without prior notice or penalty. Investments with an original maturity of more than ninety days are considered marketable securities and have been classified by management as available-for-sale. These investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current balance sheet date which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary. Such investments are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Realized gains and losses from the sale of available-for-sale securities or the amounts, net of tax, reclassified out of accumulated other comprehensive income (loss), if any, are determined on a specific identification basis.

Restricted Cash

The Company is required to maintain a letter of credit securing an amount equal to twelve months of the current monthly installment of base rent for the term of its primary facilities lease, which ends in August 2017. Under certain circumstances, the Company may be able to eliminate the need for the letter of credit. As of September 30, 2015, and December 31, 2014, restricted cash of $3.2 million was pledged as collateral for this letter of credit.

Revenue Recognition

Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Certain portions of the Company’s revenue are generated through manufacturing contracts and stand-alone license agreements.

Multiple-element arrangements

The Company has entered into multiple-element arrangements. In order to account for the multiple-element arrangements, the Company identifies the deliverables included within the agreement and evaluates which deliverables represents separate units of accounting. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation. The delivered item(s) must have value to the customer on a standalone basis and, if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the Company’s control.

A delivered item is considered a separate unit of accounting when the delivered item has value to the partner on a standalone basis based on the consideration of the relevant facts and circumstances for each arrangement. Factors considered in this determination include the research capabilities of the partner and the availability of research expertise in this field in the general marketplace. Arrangement consideration is allocated at the inception of the agreement to all identified units of accounting based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence, or VSOE, of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, the Company uses its best estimate of the selling price for the deliverable. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units. Changes in the allocation of the sales price between delivered and undelivered elements can impact revenue recognition but do not change the total revenue recognized under any agreement. If facts and circumstances dictate that the license has standalone value from the undelivered items, which generally include research and development services and the manufacture of drug products, the license is identified as a separate unit of accounting and the amounts allocated to the license are recognized upon the delivery of the license, assuming the other revenue recognition criteria have been met. However, if the amounts allocated to the license through the relative selling price allocation exceed the upfront license fee, the amount recognized upon the delivery of the license is limited to the upfront fee received. If facts and circumstances dictate that the license does not have standalone value, the transaction price, including any upfront license fee payments received, are allocated to the identified separate units of accounting and recognized as those items are delivered.

The terms of the Company’s partnership agreements provide for milestone payments upon achievement of certain regulatory and commercial events. Under the Milestone Method, the Company recognizes consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following criteria: 1) The consideration is commensurate with either the entity’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone, 2) The consideration relates solely to past performance, and 3) The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity’s performance or on the occurrence of a specific outcome resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company.

Contract Services, Grant and Royalty Revenue

The Company recognizes revenues from contract services and federal government research grants during the period in which the related expenditures are incurred and related payments for those services are received or collection is reasonably assured. Royalties to be received based on sales of licensed products by the Company’s partners incorporating the Company’s licensed technology are recognized when received.

Manufacturing and Production Costs

Manufacturing and production costs include expenses related to manufacturing contracts and expenses for the production of plasmid DNA for use in the Company’s research and development efforts. Manufacturing expenses related to manufacturing contracts are deferred and expensed when the related revenue is recognized. Production expenses related to the Company’s research and development efforts are expensed as incurred.

Net Loss Per Share

Basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted loss per share excludes any assumed exercise of stock options and any assumed issuance of common stock under restricted stock units as the effect would be antidilutive. Common stock equivalents of 0.1 million and 0.4 million for the three months ended September 30, 2015 and 2014, respectively, were excluded from the calculation because of their antidilutive effect.  Common stock equivalents of 0.4 million and 0.5 million for the nine months ended September 30, 2015 and 2014, respectively, were excluded from the calculation because of their antidilutive effect.

Stock-Based Compensation

The Company records its compensation expense associated with stock options and other forms of equity compensation based on their fair value at the date of grant using the Black-Scholes-Merton option pricing model. Stock-based compensation includes amortization related to stock option awards based on the estimated grant date fair value. Stock-based compensation expense related to stock options includes an estimate for forfeitures and the portion that is ultimately expected to vest is recognized ratably over the vesting period of the option. In addition, the Company records expense related to RSUs granted based on the fair value of those awards on the grant date. The fair value related to the RSUs is amortized to expense over the vesting term of those awards. Stock-based compensation expense related to RSUs includes an estimate for forfeitures and the portion expected to vest is recognized ratably over the requisite service period. The expected forfeiture rate of all equity-based compensation is based on observed historical patterns of the Company’s employees and is estimated to be 8.75% and 11.2% annually for each of the nine months ended September 30, 2015 and 2014, respectively.

Stock-based compensation expense for a stock-based award with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any recognized compensation expense is reversed.

Recent Accounting Pronouncements

In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The guidance allows for either full retrospective or modified retrospective adoption and will become effective for the Company in the first quarter of 2019. The Company is evaluating the alternative transition methods and the potential effects of the adoption of this update on its financial statements.

In August 2014, the FASB issued an amendment to the accounting guidance related to the evaluation of an entity to continue as a going concern. The amendment establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The amendment also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. The amended guidance is effective prospectively for fiscal years beginning after December 15, 2016. The new guidance will not have an impact on the Company’s financial position, results of operations or cash flows.

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Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	160,000,000	160,000,000
Common stock, shares issued	91,513,000	90,334,000
Common stock, shares outstanding	91,513,000	90,334,000

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Marketable Securities, Available for Sale (Tables)

9 Months Ended

Sep. 30, 2015

Investments Debt And Equity Securities [Abstract]

Summary of Available-for-Sale Marketable Securities

The following is a summary of available-for-sale marketable securities (in thousands):

September 30, 2015	Amortized Cost		Unrealized Gain		Unrealized Loss		Market Value
U.S. treasuries	$	5,030	$	5	$	—	$	5,035
Government-sponsored enterprise securities		2,000		—		—		2,000
Corporate bonds		2,005		—		—		2,005
Certificates of deposit		10,824		—		—		10,824
	$	19,859	$	5	$	-	$	19,864

December 31, 2014	Amortized Cost		Unrealized Gain		Unrealized Loss		Market Value
U.S. treasuries	$	5,558	$	—	$	1	$	5,557
Government-sponsored enterprise securities		7,499		—		6		7,493
Corporate bonds		2,025		—		5		2,020
Certificates of deposit		8,429		—		—		8,429
	$	23,511	$	-	$	12	$	23,499

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 15, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Trading Symbol	VICL
Entity Registrant Name	VICAL INC
Entity Central Index Key	0000819050
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		91,524,527

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Other Balance Sheet Accounts (Tables)

9 Months Ended

Sep. 30, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Summary of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following (in thousands):

	September 30,		December 31,
	2015		2014
Employee compensation	$	1,850	$	2,471
Clinical trial accruals		206		1,686
Accounts payable		316		227
Deferred rent		480		432
Other accrued liabilities		512		385
Total accounts payable and accrued expenses	$	3,364	$	5,201

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Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues:
Contract revenue	$ 4,427	$ 3,004	$ 12,382	$ 9,073
License and royalty revenue	590	438	1,755	1,321
Total revenues	5,017	3,442	14,137	10,394
Operating expenses:
Research and development	2,128	3,180	8,222	7,705
Manufacturing and production	1,306	2,292	6,626	7,457
General and administrative	1,916	2,366	6,271	7,176
Total operating expenses	5,350	7,838	21,119	22,338
Loss from operations	(333)	(4,396)	(6,982)	(11,944)
Other income:
Investment and other income, net	33	32	99	85
Net loss	$ (300)	$ (4,364)	$ (6,883)	$ (11,859)
Basic and diluted net loss per share	$ 0.00	$ (0.05)	$ (0.08)	$ (0.13)
Weighted average shares used in computing basic and diluted net loss per share	91,957	89,976	91,600	88,154

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Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. FAIR VALUE MEASUREMENTS

The Company measures fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

· Level 1: Observable inputs such as quoted prices in active markets;

· Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

· Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.   

Cash equivalents, marketable securities and long-term investments measured at fair value are classified in the table below in one of the three categories described above (in thousands):

	Fair Value Measurements
September 30, 2015	Level 1		Level 2		Level 3		Total
Certificates of deposit	$	10,824	$	—	$	—	$	10,824
U.S. treasuries		5,035		—		—		5,035
Corporate bonds		—		2,005		—		2,005
Government-sponsored enterprise securities		—		2,000		—		2,000
Auction rate securities		—		—		2,077		2,077
	$	15,859	$	4,005	$	2,077	$	21,941

	Fair Value Measurements
December 31, 2014	Level 1		Level 2		Level 3		Total
Certificates of deposit	$	8,674	$	—	$	—	$	8,674
Money market funds		169		—		—		169
U.S. treasuries		5,557		—		—		5,557
Corporate bonds		—		2,020		—		2,020
Government-sponsored enterprise securities		—		7,493		—		7,493
Auction rate securities		—		—		1,971		1,971
	$	14,400	$	9,513	$	1,971	$	25,884

The Company’s investments in U.S. treasury securities, certificates of deposit and money market funds are valued based on publicly available quoted market prices for identical securities as of September 30, 2015. The Company determines the fair value of corporate bonds and other government-sponsored enterprise related securities with the aid of valuations provided by third parties using proprietary valuation models and analytical tools. These valuation models and analytical tools use market pricing or similar instruments that are both objective and publicly available, including matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids and/or offers. The Company validates the valuations received from its primary pricing vendors for its level 2 securities by examining the inputs used in that vendor’s pricing process and determines whether they are reasonable and observable. The Company also compares those valuations to recent reported trades for those securities. The Company did not adjust any of the valuations received from these independent third parties with respect to any of its level 2 securities at September 30, 2015. The Company did not transfer any investments between level categories during the three and nine months ended September 30, 2015. The valuation of the Company’s investments in auction rate securities, which includes significant unobservable inputs, is more fully described in Note 5.

Activity for assets measured at fair value using significant unobservable inputs (Level 3) is presented in the table below (in thousands):

Balance at December 31, 2014	$	1,971
Total unrealized gains, excluding tax impact, included in other comprehensive loss		106
Balance at September 30, 2015	$	2,077
Total gains or losses for the period included in net loss attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	—

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Long-Term Investments

9 Months Ended

Sep. 30, 2015

Investments All Other Investments [Abstract]

Long-Term Investments

5. LONG-TERM INVESTMENTS

As of September 30, 2015, the Company held an auction rate security with a par value of $2.5 million. This auction rate security has not experienced a successful auction since the liquidity issues experienced in the global credit and capital markets in 2008. As a result, the security is classified as a long-term investment as it is scheduled to mature in 2038. The security was rated A- by Standard and Poor’s as of September 30, 2015. The security continues to pay interest according to its stated terms.

The valuation of the Company’s auction rate security is subject to uncertainties that are difficult to predict. The fair value of the security is estimated utilizing a discounted cash flow analysis. The key drivers of the valuation model include the expected term, collateral underlying the security investment, the creditworthiness of the counterparty, the timing of expected future cash flows, discount rates, liquidity and the expected holding period. The security was also compared, when possible, to other observable market data for securities with similar characteristics. As of September 30, 2015, the inputs used in the Company’s discounted cash flow analysis assumed an interest rate of 1.39%, an estimated redemption period of five years and a discount rate of 1.50%. Based on the valuation of the security, the Company has recognized cumulative losses of $0.5 million as of September 30, 2015, none of which were realized during the three months ended September 30, 2015. The losses when recognized are included in investment and other income. The market value of the security has partially recovered. Included in other comprehensive income (loss) are unrealized gains (losses) of $106,000 and $(43,000) for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, the Company had recorded cumulative unrealized gains of $0.3 million. The resulting carrying value of the auction rate security at September 30, 2015, was $2.1 million. Any future decline in market value may result in additional losses being recognized.

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Marketable Securities, Available for Sale - Summary of Available-for-Sale Marketable Securities (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 19,859	$ 23,511
Unrealized Gain	5	0
Unrealized Loss	0	12
Market Value	19,864	23,499
U.S. treasuries [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,030	5,558
Unrealized Gain	5	0
Unrealized Loss	0	1
Market Value	5,035	5,557
Government-sponsored enterprise securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,000	7,499
Unrealized Gain	0	0
Unrealized Loss	0	6
Market Value	2,000	7,493
Corporate bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,005	2,025
Unrealized Gain	0	0
Unrealized Loss	0	5
Market Value	2,005	2,020
Certificates of deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	10,824	8,429
Unrealized Gain	0	0
Unrealized Loss	0	0
Market Value	$ 10,824	$ 8,429

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Summary of Cash Equivalents, Marketable Securities and Long-Term Investments Measured at Fair Value

Cash equivalents, marketable securities and long-term investments measured at fair value are classified in the table below in one of the three categories described above (in thousands):

	Fair Value Measurements
September 30, 2015	Level 1		Level 2		Level 3		Total
Certificates of deposit	$	10,824	$	—	$	—	$	10,824
U.S. treasuries		5,035		—		—		5,035
Corporate bonds		—		2,005		—		2,005
Government-sponsored enterprise securities		—		2,000		—		2,000
Auction rate securities		—		—		2,077		2,077
	$	15,859	$	4,005	$	2,077	$	21,941

	Fair Value Measurements
December 31, 2014	Level 1		Level 2		Level 3		Total
Certificates of deposit	$	8,674	$	—	$	—	$	8,674
Money market funds		169		—		—		169
U.S. treasuries		5,557		—		—		5,557
Corporate bonds		—		2,020		—		2,020
Government-sponsored enterprise securities		—		7,493		—		7,493
Auction rate securities		—		—		1,971		1,971
	$	14,400	$	9,513	$	1,971	$	25,884

Summary of Activity for Assets Measured at Fair Value Using Significant Unobservable Inputs

Activity for assets measured at fair value using significant unobservable inputs (Level 3) is presented in the table below (in thousands):

Balance at December 31, 2014	$	1,971
Total unrealized gains, excluding tax impact, included in other comprehensive loss		106
Balance at September 30, 2015	$	2,077
Total gains or losses for the period included in net loss attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	—

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Cash, Cash Equivalents and Marketable Securities

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents consist of cash and highly liquid securities with original maturities at the date of acquisition of ninety days or less and can be liquidated without prior notice or penalty. Investments with an original maturity of more than ninety days are considered marketable securities and have been classified by management as available-for-sale. These investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current balance sheet date which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary. Such investments are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Realized gains and losses from the sale of available-for-sale securities or the amounts, net of tax, reclassified out of accumulated other comprehensive income (loss), if any, are determined on a specific identification basis.

Restricted Cash

Restricted Cash

The Company is required to maintain a letter of credit securing an amount equal to twelve months of the current monthly installment of base rent for the term of its primary facilities lease, which ends in August 2017. Under certain circumstances, the Company may be able to eliminate the need for the letter of credit. As of September 30, 2015, and December 31, 2014, restricted cash of $3.2 million was pledged as collateral for this letter of credit.

Revenue Recognition

Revenue Recognition

Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Certain portions of the Company’s revenue are generated through manufacturing contracts and stand-alone license agreements.

Multiple-element arrangements

Multiple-element arrangements

The Company has entered into multiple-element arrangements. In order to account for the multiple-element arrangements, the Company identifies the deliverables included within the agreement and evaluates which deliverables represents separate units of accounting. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation. The delivered item(s) must have value to the customer on a standalone basis and, if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the Company’s control.

A delivered item is considered a separate unit of accounting when the delivered item has value to the partner on a standalone basis based on the consideration of the relevant facts and circumstances for each arrangement. Factors considered in this determination include the research capabilities of the partner and the availability of research expertise in this field in the general marketplace. Arrangement consideration is allocated at the inception of the agreement to all identified units of accounting based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence, or VSOE, of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, the Company uses its best estimate of the selling price for the deliverable. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units. Changes in the allocation of the sales price between delivered and undelivered elements can impact revenue recognition but do not change the total revenue recognized under any agreement. If facts and circumstances dictate that the license has standalone value from the undelivered items, which generally include research and development services and the manufacture of drug products, the license is identified as a separate unit of accounting and the amounts allocated to the license are recognized upon the delivery of the license, assuming the other revenue recognition criteria have been met. However, if the amounts allocated to the license through the relative selling price allocation exceed the upfront license fee, the amount recognized upon the delivery of the license is limited to the upfront fee received. If facts and circumstances dictate that the license does not have standalone value, the transaction price, including any upfront license fee payments received, are allocated to the identified separate units of accounting and recognized as those items are delivered.

The terms of the Company’s partnership agreements provide for milestone payments upon achievement of certain regulatory and commercial events. Under the Milestone Method, the Company recognizes consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following criteria: 1) The consideration is commensurate with either the entity’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone, 2) The consideration relates solely to past performance, and 3) The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity’s performance or on the occurrence of a specific outcome resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company.

Contract Services, Grant and Royalty Revenue

Contract Services, Grant and Royalty Revenue

The Company recognizes revenues from contract services and federal government research grants during the period in which the related expenditures are incurred and related payments for those services are received or collection is reasonably assured. Royalties to be received based on sales of licensed products by the Company’s partners incorporating the Company’s licensed technology are recognized when received.

Manufacturing and Production Costs

Manufacturing and Production Costs

Manufacturing and production costs include expenses related to manufacturing contracts and expenses for the production of plasmid DNA for use in the Company’s research and development efforts. Manufacturing expenses related to manufacturing contracts are deferred and expensed when the related revenue is recognized. Production expenses related to the Company’s research and development efforts are expensed as incurred.

Net Loss Per Share

Net Loss Per Share

Basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares used to compute diluted loss per share excludes any assumed exercise of stock options and any assumed issuance of common stock under restricted stock units as the effect would be antidilutive. Common stock equivalents of 0.1 million and 0.4 million for the three months ended September 30, 2015 and 2014, respectively, were excluded from the calculation because of their antidilutive effect.  Common stock equivalents of 0.4 million and 0.5 million for the nine months ended September 30, 2015 and 2014, respectively, were excluded from the calculation because of their antidilutive effect.

Stock-Based Compensation

Stock-Based Compensation

The Company records its compensation expense associated with stock options and other forms of equity compensation based on their fair value at the date of grant using the Black-Scholes-Merton option pricing model. Stock-based compensation includes amortization related to stock option awards based on the estimated grant date fair value. Stock-based compensation expense related to stock options includes an estimate for forfeitures and the portion that is ultimately expected to vest is recognized ratably over the vesting period of the option. In addition, the Company records expense related to RSUs granted based on the fair value of those awards on the grant date. The fair value related to the RSUs is amortized to expense over the vesting term of those awards. Stock-based compensation expense related to RSUs includes an estimate for forfeitures and the portion expected to vest is recognized ratably over the requisite service period. The expected forfeiture rate of all equity-based compensation is based on observed historical patterns of the Company’s employees and is estimated to be 8.75% and 11.2% annually for each of the nine months ended September 30, 2015 and 2014, respectively.

Stock-based compensation expense for a stock-based award with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any recognized compensation expense is reversed.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The guidance allows for either full retrospective or modified retrospective adoption and will become effective for the Company in the first quarter of 2019. The Company is evaluating the alternative transition methods and the potential effects of the adoption of this update on its financial statements.

In August 2014, the FASB issued an amendment to the accounting guidance related to the evaluation of an entity to continue as a going concern. The amendment establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The amendment also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. The amended guidance is effective prospectively for fiscal years beginning after December 15, 2016. The new guidance will not have an impact on the Company’s financial position, results of operations or cash flows.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

7. COMMITMENTS AND CONTINGENCIES

In late October and early November 2013, following the Company’s announcement of the results of its Phase 3 trial of Allovectin^® and the subsequent decline of the price of its common stock, two putative securities class action complaints were filed in the U.S. District Court for the Southern District of California against the Company and certain of its current and former officers. On February 26, 2014, the two cases were consolidated into one action and a lead plaintiff and lead counsel were appointed, or Consolidation Order.  On May 12, 2014, the lead plaintiff filed a first amended consolidated complaint alleging that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially false and misleading statements regarding the Company’s business prospects and the prospects for Allovectin^®, thereby artificially inflating the price of its common stock.  On June 9, 2014, the defendants filed a motion to dismiss the first amended complaint and a motion to strike certain allegations in the amended complaint.  On March 9, 2015, the Court granted defendants’ motion to dismiss the first amended complaint and terminated as moot defendants’ motion to strike, or Order. The Lead plaintiff was granted leave to amend his first amended complaint on or before March 25, 2015. The lead plaintiff chose not to amend his complaint and instead stipulated to an entry of judgment. On April 28, 2015, the Court entered final judgment dismissing the action, or Judgment. On May 28, 2015, the lead plaintiff appealed the Order and Judgment to the U.S. Court of Appeals for the Ninth Circuit. That same day, another group of the Company’s stockholders, that had previously moved for appointment as lead plaintiff, or the Vical Investor Group, also appealed the Order and Judgment, as well as the Consolidation Order, to the U.S. Court of Appeals for the Ninth Circuit. On August 3, 2015, the Vical Investor Group voluntarily dismissed its appeal. On October 8, 2015, the lead plaintiff-appellant filed an opening brief in support of his appeal. The Defendants’ answering brief is currently due on November 9, 2015.

In the ordinary course of business, the Company may become a party to additional lawsuits involving various matters. The Company is unaware of any such lawsuits presently pending against it which, individually or in the aggregate, are deemed to be material to the Company’s financial condition or results of operations.

The Company prosecutes its intellectual property vigorously to obtain the broadest valid scope for its patents. Due to uncertainty of the ultimate outcome of these matters, the impact on future operating results or the Company’s financial condition is not subject to reasonable estimates.

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Astellas License Agreements

9 Months Ended

Sep. 30, 2015

Astellas Out-License Agreements [Member]

Astellas License Agreements

8. ASTELLAS OUT-LICENSE AGREEMENTS

In July 2011, the Company entered into license agreements with Astellas Pharma Inc., or Astellas, granting Astellas  exclusive, worldwide, royalty-bearing licenses under certain of the Company's know-how and intellectual property to develop and commercialize certain products containing plasmids encoding certain forms of cytomegalovirus, glycoprotein B and/or phosphoprotein 65, including ASP0113 (TransVax™) but excluding CyMVectin™.

Under the terms of the agreements, the Company is performing research and development services and manufacturing services which are being paid for by Astellas. During the three months ended September 30, 2015 and 2014, the Company recognized $4.4 million and $3.0 million, respectively, of revenue related to these contract services. During the nine months ended September 30, 2015 and 2014, the Company recognized $12.4 million and $9.1 million, respectively, of revenue related to these contract services. The Company also recognized $1.5 million and $1.1 million in license revenue under the Astellas agreements during the nine months ended September 30, 2015 and 2014, respectively.

Astellas In-License Agreements [Member]

Astellas License Agreements

9. ASTELLAS IN-LICENSE AGREEMENTS

In March 2015, the Company entered into license and stock purchase agreements with Astellas, granting Vical exclusive worldwide license to develop and commercialize a novel antifungal, VL-2397, formally known as ASP2397. VL-2397 is a potential therapeutic for invasive fungal infections, including invasive aspergillosis. Astellas received 861,216 shares of unregistered Vical common stock and $250,000 in cash. The $250,000 cash payment and the fair value of the common stock issued of $775,094 were included in research and development expenses during the nine months ending September 30, 2015.  Astellas will also be eligible to receive up to $100 million in aggregate milestone payments, the vast majority of which are commercial and sales milestones, and single-digit royalties on net sales of commercial products.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Total Stock-Based Compensation Expense

Total stock-based compensation expense was allocated to research and development, manufacturing and production and general and administrative expense as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Research and development	$	93	$	186	$	309	$	628
Manufacturing and production		42		56		123		177
General and administrative		302		488		1,102		1,646
Total stock-based compensation expense	$	437	$	730	$	1,534	$	2,451

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Stock-Based Compensation - Summary of Total Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 437	$ 730	$ 1,534	$ 2,451
Research and development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	93	186	309	628
Manufacturing and production [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	42	56	123	177
General and administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 302	$ 488	$ 1,102	$ 1,646

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Long-Term Investments - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Investments Schedule [Abstract]
Auction rate securities held, at par value	$ 2,500,000	$ 2,500,000
Maturity of long-term investment		2038
Recognized cumulative losses	500,000	$ 500,000
Unrealized gains (losses) on auction rate securities		106,000	$ (43,000)
Cumulative unrealized gains	300,000	300,000
Carrying value of auction rate security	2,077,000	$ 2,077,000		$ 1,971,000
Assumed interest rate		1.39%
Estimated redemption period		5 years
Fair value input discount rate		1.50%
Recognized cumulative losses realized	$ 0

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Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (300)	$ (4,364)	$ (6,883)	$ (11,859)
Unrealized gain (loss) on available-for-sale and long-term marketable securities:
Unrealized gain (loss) arising during holding period	98	(69)	123	(59)
Other comprehensive gain (loss)	98	(69)	123	(59)
Total comprehensive loss	$ (202)	$ (4,433)	$ (6,760)	$ (11,918)

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Other Balance Sheet Accounts

9 Months Ended

Sep. 30, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Other Balance Sheet Accounts

4. OTHER BALANCE SHEET ACCOUNTS

Accounts payable and accrued expenses consisted of the following (in thousands):

	September 30,		December 31,
	2015		2014
Employee compensation	$	1,850	$	2,471
Clinical trial accruals		206		1,686
Accounts payable		316		227
Deferred rent		480		432
Other accrued liabilities		512		385
Total accounts payable and accrued expenses	$	3,364	$	5,201

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Fair Value Measurements - Summary of Cash Equivalents, Marketable Securities and Long-Term Investments Measured at Fair Value (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 21,941	$ 25,884
Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	10,824	8,674
U.S. treasuries [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	5,035	5,557
Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	2,005	2,020
Government-sponsored enterprise securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	2,000	7,493
Auction rate securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	2,077	1,971
Money market funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		169
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	15,859	14,400
Level 1 [Member] | Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	10,824	8,674
Level 1 [Member] | U.S. treasuries [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	5,035	5,557
Level 1 [Member] | Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 1 [Member] | Government-sponsored enterprise securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 1 [Member] | Auction rate securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 1 [Member] | Money market funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		169
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,005	9,513
Level 2 [Member] | Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 2 [Member] | U.S. treasuries [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 2 [Member] | Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	2,005	2,020
Level 2 [Member] | Government-sponsored enterprise securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	2,000	7,493
Level 2 [Member] | Auction rate securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 2 [Member] | Money market funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		0
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	2,077	1,971
Level 3 [Member] | Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 3 [Member] | U.S. treasuries [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 3 [Member] | Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 3 [Member] | Government-sponsored enterprise securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Level 3 [Member] | Auction rate securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 2,077	1,971
Level 3 [Member] | Money market funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		$ 0

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Basis of Presentation - Additional Information (Detail) - USD ($) $ in Thousands, shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Maximum period for cash and highly liquid securities with original maturities			90 days or less
Minimum period for marketable securities classified as available-for-sale with original maturities			More than 90 days
Amount of letter of credit, description			The Company is required to maintain a letter of credit securing an amount equal to twelve months of the current monthly installment of base rent for the term of its primary facilities lease, which ends in August 2017.
Restricted cash	$ 3,246		$ 3,246		$ 3,182
Common stock equivalents excluded from the calculation of diluted net income per share	0.1	0.4	0.4	0.5
Expected forfeiture rate of equity based compensation			8.75%	11.20%