UPDATED: Bristol-Myers forges a billion-dollar cancer vaccine deal with Bavarian Nordic

Determined to stay ahead of the growing pack of rivals in immuno-oncology, Bristol-Myers Squibb ($BMY) has swooped in with $60 million upfront to gain an option on Bavarian Nordic's Phase III therapeutic prostate cancer vaccine Prostvac, ready to shell out an additional $915 million-plus in milestones if it takes the next step to license and ultimately commercialize the therapy. In the meantime, Bristol-Myers--which has now committed up to $2.6 billion in three new cancer R&D deals over the past two weeks--and its new partner are hatching plans for a slate of combination studies.

If Bristol-Myers does take the next step, it will be on the hook for another $80 million payment, more than $230 million in development milestones if the therapy tops its Phase II efficacy results, $110 million in regulatory milestones and $495 in sales milestones. The Danish biotech will manufacture Prostvac and also stands to earn a double-digit royalty. 

Shares of Bavarian Nordic (OMX:BAVA) shot up 30% on the news this morning.

Bristol-Myers' deal today could go a long way toward reviving expectations for cancer vaccines, which have experienced a multitude of setbacks in the clinic at Merck KGaA and elsewhere. The pioneering cancer vaccines just haven't had the efficacy punch needed to prove their value. But with checkpoint inhibitors like Bristol-Myers' leading program for Opdivo stealing the limelight in cancer R&D, leaders in the field are demonstrating a renewed interest in matching a therapy that can jump-start an immune attack on specific cancer cells with new therapies that are taking the brakes off an immune system assault.

Bavarian Nordic CEO Paul Chaplin

"Obviously, we've been looking for a partner for some time," Bavarian Nordic CEO Paul Chaplin tells FierceBiotech. In the early days the field's risky profile had an effect. But with the arrival of checkpoint inhibitors and the booming market for collaborations, the pendulum swung in Bavarian Nordic's favor, particularly as new data rolled in on Prostvac's efficacy.

"The world has changed," adds Chaplin, pointing to the large percentage of cancer patients who don't respond to the checkpoint drugs and could well benefit substantially by adding a cancer vaccine. "I think we became quite popular in the last 18 months."

Bavarian Nordic ended 2014 with its Phase III program for Prostvac fully enrolled with 1,200 patients. The final readout is expected 18 to 24 months after full enrollment with three interim analyses along the way that might possibly trigger the option deal.

Bristol-Myers already has a mid-stage combination study underway with Prostvac and Yervoy to test that theory. More combo studies are being planned, according to today's announcement. And just days ago Bristol-Myers and Aduro noted that they had begun a midstage study of a combination therapy that includes Opdivo and GVAX, one of the failed cancer vaccines that has now come back into the spotlight.

Last week Bristol-Myers and Bavarian Nordic rolled out some promising data from an early-stage study combining Prostvac and Yervoy. Investigators from the National Cancer Institute say that the overall survival benefit in one cohort hit 37.2 months with an average median OS of 31.3 months. That stacks up against an "expected" OS rate of 18.5 months. Researchers enrolled 30 patients in that study. 

The deal today marks the latest step in a multibillion-dollar deal spree in cancer R&D for Bristol-Myers. In late February the company bought Flexus in a $1.25 billion acquisition, and added a $339 million pact with Rigel. 

"Our agreement with Bavarian Nordic reflects our commitment to following the emerging science in immuno-oncology and supports our strategy to transform the treatment of cancer across multiple tumor types, lines of therapy and stages of disease," says Michael Giordano, who runs oncology R&D for Bristol-Myers.

- here's the release

Read more on