EU's investment bank continues move into R&D financing with €50M Bavarian Nordic loan

The European Investment Bank (EIB) has opened its checkbook for another biotech. Bavarian Nordic (CPH:BAVA) is the latest company to benefit from EIB's newfound willingness to finance drug development, snagging access to up to €50 million ($56 million) in loans for its Ebola and immunotherapy programs.

Bavarian Nordic CEO Paul Chaplin

Kvistgaard, Denmark-based Bavarian Nordic can take the €50 million in one or more tranches at any time over the next 18 months, although an update to its cash forecasts suggests the money will land in its bank account sooner rather than later. Bavarian Nordic added €47 million to its year-end cash forecast after securing the loan. The cash projection gives Bavarian Nordic almost €200 million, the EIB-provided slice of which is earmarked for Ebola programs, the U.S. National Cancer Institute (NCI)-partnered immunotherapy CV-301 and a respiratory syncytial virus (RSV) vaccine.

CV-301 is the most advanced of the programs. The NCI ran Phase II trials of the poxvirus-based immunotherapy--which is designed to trigger an immune response to cells overexpressing CEA or MUC-1--in patients with colorectal and metastatic breast cancer. CV-301 failed to statistically outperform a placebo in the breast cancer trial, but Bavarian Nordic still thinks the drug has a shot. Having picked up the rights to the immunotherapy in 2011, Bavarian Nordic started a Phase II trial in patients with bladder cancer last year.    

Bavarian Nordic now has the cash to explore the development of CV-301 in other indications--CEA and MUC-1 are overexpressed in cancers of the stomach, pancreas and lung--while also pushing ahead with its RSV and Ebola vaccine programs. The money for this work is being provided by the European Union's nonprofit lending institution, EIB, which is pursuing an R&D-enabling investment agenda. EIB gave UCB (EBR:UCB) up to €75 million in return for co-ownership of 6 projects last year, and Innocoll ($INNL) landed €25 million in debt financing in April.

The Bavarian Nordic deal is less novel than the UCB risk-sharing agreement. Exact terms are still being decided, but the options are for Bavarian Nordic to pay fixed or variable interest on a three- to 5-year bullet loan. Bullet loans are repayable at the end of an agreed-upon period.  

- read the release