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Kerrisdale 2-0 this week: Bavarian Nordic’s cancer vaccine is a bust in PhIII

Another cancer vaccine has bitten the dust.

Six long years after starting their Phase III trial for the prostate cancer vaccine Prostvac, an independent monitoring committee says it’s time to simply scrap Bavarian Nordic’s {$BAVA.CO} study after concluding it wasn’t working at a final interim analysis stage.

Investors who had stuck with the Danish biotech weren’t pleased. Its shares lost half their value, and one analyst, Peter Welford at Jefferies, says the flop could read through to a follow up program. He wrote:

We note BAVA also has CV-301 in Phase II for bladder cancer and entering Phase Ib/II for lung cancer (NSCLC) +Keytruda, plus Phase II for urothelial carcinoma +Tecentriq. CV-301 comprises a similar backbone and TRICOM co-stimulatory molecules to PROSTVAC with different antigens. Hence, given the significant setback for PROSTVAC, we expect the market to now more heavily discount CV-301, with our NPV c.DKK30/share (9%).

Paul Chaplin, Bavarian Nordic

Bristol-Myers Squibb paid $60 million up front to license the cancer vaccine, with $80 million lined up for the option on Phase III data, with hundreds of millions in prospective milestones.

That all just went poof.

The late-stage failure follows a short attack from Sahm Adrangi’s Kerrisdale Capital, who called it two years ago as a series of cancer vaccines like Stimuvax fell short of the mark.

“The history of therapeutic cancer vaccines is two decades of unmitigated failure,” Adrangi wrote in 2015. “We expect nothing different from Bavarian Nordic.”

The setback also follows multiple delays, which Chaplin had cheered as an indication that taking more time to reach the number of events needed for the readout was an indication of success.

That theory, which has been used by Northwest Bio and others, has been proven wrong time and again.

Kerrisdale Capital has been proven right twice this week, with Sage’s ugly misfire on SRSE proving that the drug was no better than a placebo in getting a response. But in that case, being right didn’t mean winning a cash reward, as Sage’s stock went up after the Phase III failure.

As far as the stock market is concerned now, these are special times, when investor reactions can be markedly different than the norm.

I asked Adrangi what he thought about the failure. His response:

“Prostvac’s failure is what any observer should have expected given the unexceptional earlier stage treatment arm survival. The vaccine’s unsophisticated design was doomed for failure — simply administering tumor-associated antigens and hoping for an effective immune response always seemed to us a dead end.”
“We are extremely disappointed for patients that this study of Prostvac as monotherapy was not successful,” said Bavarian Nordic CEO Paul Chaplin. “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.”


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