Bavarian Nordic eyes $86M Nasdaq IPO to advance cancer, infectious disease pipeline

Bavarian Nordic (CPH:BAVA) is turning to Nasdaq to bankroll the advance of its pipeline of infectious disease and cancer vaccines. The decision follows a breakout two-year period for the long-running company, in which alliances with Bristol-Myers Squibb ($BMY) and Johnson & Johnson ($JNJ) raised investor expectations for its pipeline products.

Bavarian Nordic CEO Paul Chaplin

Kvistgaard, Denmark-based Bavarian Nordic is now looking to investors in the U.S. to provide it with the cash it needs to discover whether its unpartnered programs can match these elevated expectations. Bavarian Nordic has pencilled in an $86 million (€80 million) fundraising target for the IPO, although the exact terms of the offering are still being decided. The size of the haul, assuming Bavarian Nordic drums up enough interest to go ahead with the listing, will dictate how far the company can advance MVA-BN RSV, CV-301 and MVA-BN Brachyury without topping up its bank balance.

The three candidates represent Bavarian Nordic's brightest pipeline prospects that are yet to be taken on by a Big Pharma company. CV-301, a poxvirus-based immunotherapy licensed from the U.S. National Cancer Institute (NCI), is the most advanced of the three programs, having been tested in more than 300 patients to date. The NCI has sponsored the studies that trialled CV-301 in these patients, including an ongoing Phase II bladder cancer program, but Bavarian Nordic now plans to step up its own activities. The plan is to build the case for combining CV-301 with checkpoint inhibitors.

A Phase II trial in people with non-small cell lung cancer, which is due to start in the second half of 2016, is the next major component of this strategy. Bavarian Nordic is also planning Phase II trials in patients with bladder and colorectal cancers. "These trials will evaluate the efficacy of the individual components, as well as the combination of the vaccine and checkpoint inhibitor to determine what, if any, synergy can be seen in combination," Bavarian Nordic wrote in its filing with the U.S. Securities and Exchange Commission.

Another immunotherapy, MVA-BN Brachyury, will swallow up a second tranche of the IPO financing, enabling Bavarian Nordic to add to data already being generated in an NCI-sponsored Phase I trial in patients with a rare cancer of the skull and spine. The third target for investment is MVA-BN RSV, a respiratory syncytial virus vaccine candidate that entered Phase I in August. Data from the study are due in the first half of the year, at which point Bavarian Nordic will decide whether to push ahead with plans to advance quickly into multiple studies in adult, elderly and pediatric populations.

While MVA-BN RSV, CV-301 and MVA-BN Brachyury will receive the bulk of the IPO funding, the attractiveness, or otherwise, of Bavarian Nordic to investors is linked strongly to other parts of its business. The events that have driven Bavarian Nordic's stock up more than 280% in the past two years are tied to Prostvac, which is the focus of a $975 million deal with Bristol-Myers, and, to a lesser extent, the J&J-partnered Ebola vaccine MVA-BN Filo. Some observers, notably short seller Kerrisdale Capital, have questioned whether the hype around cancer vaccine Prostvac is justified.

Top-line data from a Phase III monotherapy trial of Prostvac could go some way to settling the row, but investors will have to wait until next year to get a full look at those results. Ahead of that readout, Bavarian Nordic is expected to post a series of interim survival analyses from the trial, starting with a first look early this year. Data from 5 NCI-sponsored Phase II trials are also due to drop from this year onward, while Bristol-Myers is gearing up to trial Prostvac in combination with its checkpoint inhibitors.

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