Bavarian Nordic gears up for PhII RSV trial after bouncing back from IPO setback

Bavarian Nordic (CPH:BAVA) has switched gears quickly following the realization its $86 million (€76 million) Nasdaq IPO was dead on arrival, pulling in $100 million in a private placement that will allow it to push ahead with plans to kick off a Phase II respiratory syncytial virus (RSV) trial later this year.

Kvistgaard, Denmark-based Bavarian Nordic had earmarked the anticipated IPO haul for investment in two to three pipeline prospects, the near-term fates of which have been secured by its decision to tap an alternative source of funding.

Having withdrawn its SEC registration filing on April 13, Bavarian Nordic had the private placement all sewn up on April 18. The accelerated bookbuilding process has set Bavarian Nordic up to continue advancing its pipeline on multiple fronts despite having to drop its plans to bring Nasdaq investors on board.

The money has landed in Bavarian Nordic’s bank account shortly before data from a clinical trial of its MVA-BN RSV program are due to drop. With Bavarian Nordic still expecting the data in the first half of 2016, it intends to shuttle the RSV vaccine into the next phase of development before the year is out. “We plan to start a Phase II in the second half of this year in the RSV season, so that'll actually be up and running in H2 of this year,” Seth Lewis, Bavarian Nordic’s U.S. VP of investor relations, told FierceBiotech.

With the $100 million private placement being added to a bank account that already contained $212 million at the end of 2015--and a forecast of financial break even for this year--Bavarian Nordic has the means to advance the RSV program in parallel to its CV-301 immunotherapy.

“We're starting CV-301 Phase II studies in three separate tumor indications. The first one we've said we'll start with is lung. And we're going to do each of those in combination with various checkpoint inhibitors,” Lewis said. The lung trial will pair CV-301 with Bristol-Myers Squibb’s ($BMS) Opdivo. Bavarian Nordic is currently considering bladder and colorectal cancer as the other two indications for its CV-301 Phase II program, but is yet to commit definitively.

Whatever comes next, Bavarian Nordic will face it without the benefits--and obligations--that come from a listing on Nasdaq. Like GenSight and BioCardia, Bavarian Nordic has learnt that now is a tough time to get an IPO off the ground.

“The approach of heading to the U.S. for an IPO at this time ... wasn't really where the markets appeared to be comfortable,” Lewis said. “We spent a lot of time obviously preparing for that, and there was a lot of positivity toward it. But when it came to the current market conditions and where people were at with their portfolios and what not, it was certainly just a different conversation.”

A patchwork of global financiers have stepped in to provide the money the potential IPO backers were unwilling to commit. "We were able to not only bring in the support of existing investors, but also bring in some new investors both across Europe, the U.K. and then in the U.S. as well,” Lewis said. Existing investors appear unfazed by the change of plans. Shares of Bavarian Nordic traded up 8% in the days after the company revealed the withdrawal of its IPO filing.

Whether these will ultimately prove to be wise investments is a topic of some debate. Short seller Kerrisdale Capital stirred up the discussion in August when it issued a report branding Bavarian Nordic’s experimental prostate cancer vaccine “ineffective.”

Shares in Bavarian Nordic traded down following the report, but it has proven relatively resilient against the attacks. The stock is down 14% since Kerrisdale posted its report, a significant decline but less than the 26% drop suffered by the Nasdaq Biotechnology Index ($IBB) over the same period.

That is an index Bavarian Nordic will watch from a distance for the foreseeable future. “We obviously have adequate capital at this point,” Lewis said.

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