Buffeted by headwinds, Bavarian Nordic cancels IPO

Bavarian Nordic

“Market conditions” strike again as cancer vaccine biotech Bavarian Nordic has dropped an $86 million IPO.

The Kvistgaard, Denmark-based company--which is developing vaccines that stimulate a T-cell response to fight infectious diseases and cancers--withdrew its plans for an initial public offering on Wednesday, citing market conditions.

It originally filed in January with a proposed deal size of $86 million, with the money earmarked to bankroll new trials for its vaccine candidates. Instead of an IPO, the company said it is however now going for a private placement of around $100 million.

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The biotech commands a market cap of more than $1 billion and booked $149 million in sales last year.  It had planned to list on the Nasdaq under the symbol “$BAVN.”

This will be a setback for BN and comes after it was attacked last year by short-seller investment group Kerrisdale Capital, who said that the biotech’s investigational prostate-cancer vaccine, Prostvac-VF, is “ineffective.”

It added that midstage studies for the drug have been underwhelming, saying that even its more recent data--including a trial combining Prostvac with a checkpoint inhibitor--showed “mediocre survival and the absence of any clinical benefit.”

This contrasts with Bavarian’s claims--also made last year--that Prostvac has produced “the most pronounced survival to date in prostate cancer.” The drug, which was originally developed by the now defunct Therion, was tested in the early 2000s for minimally symptomatic men with metastatic castration-resistant prostate cancer, but failed to improve progression-free survival.

When BN acquired the drug it re-analysed the data, saying it that median overall survival was in fact boosted by 8.5 months compared to placebo, hence its claims of success. The investment firm contends however that the control group contained had a higher median age (nearly 8 years’ older) than Prostvac’s group, and that the placebo patients had worst diagnoses, something it says skewered the results.

Kerrisdale’s opinion is not shared by all and the drug is in fact being co-developed with Bristol-Myers Squibb ($BMY), who signed a deal worth as much as $975 million last March, with a $60 million upfront payment.

The company has the option to license the drug and sits well with its melanoma immunotherapy Yervoy and its new checkpoint inhibitor Opdivo, with these medicines also slated to be used alongside Prostvac in future trials.

Analysts at Edison Research have predicted that Prostvac could eventually achieve sales of $1.3 billion at peak (assuming a treatment price of $50,000 a year), should it gain approval.

And it’s not the only Big Pharma to show interest: late last year, Johnson & Johnson ($JNJ) penned a deal with the company to co-develop a HPV vaccine alongside Janssen’s AdVac technology. Neither of the two companies released financial terms of the deal.

The biotech also has three other lead candidates, known as MVA-BN RSV, CV-301 and MVA-BN, which target bladder, colorectal and lung cancers, as well as the respiratory syncytial virus (RSV).

BN has got caught up in a tough IPO market that has been suffering in recent months due to a poor financial environment. Some have managed to get their IPOs away--including U.K.’s Shield Therapeutics and CA-based Corvus Pharmaceuticals--but both had to settle for a major discount on what they had originally planned for.

Dr. Frédéric Sedel, CEO of French multiple sclerosis specialist MedDay, told FierceBiotech earlier this month that he would hold off on an IPO until later this year--if not until 2017--because of the issues other biotechs have endured.

This is contrasted with VC funding, which is enjoying a strong quarter. In fact, MedDay raised $39 million just last week, with a recent round for J. Craig Venter’s San Diego outfit Human Longevity Inc. raising an impressive $220 million.

The investment firm Renaissance Capital said that there was a “baffling disconnect” between the struggles of the IPO market this quarter while VCs “continue to raise record funds.”

- check out Renaissance Capital’s take
- take a look at Kerrisdale’s 2015 report (PDF)

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