Bavarian Nordic tanks after Bristol-Myers-partnered vaccine flunks phase 3 prostate cancer trial

Bavarian Nordic’s repeatedly delayed phase 3 cancer vaccine trial has come crashing to a halt. The data monitoring committee ended the six-year odyssey after ruling it would be futile to keep treating patients with the Bristol-Myers Squibb-partnered Prostvac.

Shares in Bavarian Nordic fell more than 50% following the news, wiping out gains made in 2015 when the Bristol-Myers deal dialed up investor expectations for the therapeutic cancer vaccine. The deal gave Bristol-Myers an option to license Prostvac for a fee that may have topped $230 million, but is now likely $80 million, for a period of time after the release of data from the phase 3.  

The failure of Prostvac to improve overall survival in patients with metastatic castration-resistant prostate cancer has crushed hopes that Bavarian Nordic will see much of the close to $1 billion in milestones tied to the Bristol-Myers deal.

Copenhagen, Denmark-based Bavarian Nordic’s hopes of salvaging Prostvac now rest on whether it can boost the effect of other immuno-oncology agents, notably Bristol-Myers’ PD-1 and CTLA-4 checkpoint inhibitors Opdivo and Yervoy. Publicly, Bavarian Nordic has not given up hope that the cancer vaccine can complement these drugs. 

“While this is certainly not the desired outcome, we remain steadfast believers in the power of combination treatments, including immunotherapies, to transform the future of cancer therapies,” Bavarian Nordic CEO Paul Chaplin said in a statement. lists one trial that is testing Prostvac in combination with Yervoy. Another study is trialing Prostvac on top of one or both of Opdivo and Yervoy. Neither study is due to deliver data until late 2019.

That suggests Prostvac may continue stumbling forward for years to come, adding to an already prolonged clinical development program. Back when Bavarian Nordic began the Prostvac phase 3 in 2011, it gave itself two years to fully enroll the trial. Three years, a change of cancer vaccine unit head and a tweaking of the trial design later, Bavarian Nordic enrolled the last patient in the study.

The delays have continued since then, primarily because patients in the trial died at a slower rate than anticipated. Chaplin said that was “great news” for patients. But, as other cancer trials have shown, it isn’t necessarily good news for the drug developer. The halting of the phase 3 is another data point to show overrunning cancer trials do not equate to higher odds of success.

Prostvac’s failure also validates a 2015 report by short seller Kerrisdale Capital, which argued phase 2 data generated by the vaccine were pumped up differences in the pre-study health of patients in the treatment and placebo cohorts. However, it is questionable whether Kerrisdale profited much from today’s collapse of Bavarian Nordic’s stock price.

The hedge fund established a 2.7% short position in Bavarian Nordic in 2015 but dialed down its commitment throughout that year. In November 2015, Kerrisdale’s short position fell below the 0.5% reporting threshold and never again exceeded that level.

Denmark’s Financial Supervisory Authority lists five investors as having active short positions in Bavarian Nordic: Oxford Asset Management, Marshall Wace, Capital Fund Management, AHL Partners and Adage Capital Management. The 1.28% short position held by London-based hedge fund Marshall Wace is the largest of the five.