DUBLIN Shares in Bavarian Nordic A/S surged 35 percent Wednesday on news of a $975 million option and licensing deal with Bristol-Myers Squibb Co. involving its prostate cancer vaccine Prostvac. New York-based BMS is paying $60 million up front and could pay up to $935 million more in milestones linked to the progress of the immunotherapy, which is currently undergoing a phase III trial in 1,200 patients with metastatic castration-resistant prostate cancer (mCRPC).
A positive readout from the event-based study would trigger an $80 million option fee. Additional milestones would be tied to the level of efficacy. Prostvac conferred an 8.5 month overall survival (OS) benefit in a phase II trial in 125 patients. Achieving that mark again would trigger a baseline payment of $50 million plus $180 million, for example.
"If they are worse, you get less. If they are better you get more," Bavarian Nordic vice president for investor relations and communication, Rolf Sass Sørensen, told BioWorld Today. A six-month OS benefit would trigger a baseline payment of $50 million plus an undisclosed sum, whereas an 11-month benefit would result in a baseline payment of $50 million plus $250 million. Sales-based milestones could add another $495 million to the tally.
Bavarian Nordic, of Kvistgård, Denmark, would also receive tiered double-digit sales royalties, and it has also entered a manufacturing and supply agreement with BMS, should the product go all the way.
"To our knowledge, this is the largest single license deal for vaccines in recent history," said Bavarian's senior vice president of business development, Robert Ang.
The deal is "much in line with our expectations," although the milestones could be "somewhat higher than the market expected," Dankse Equities analyst Thomas Bowers told BioWorld Today. "The important thing here is it significantly derisks the whole program," Cancer immunotherapy remains a difficult space. "There are a significant number of failures," he said.
Moreover, achieving regulatory approval is no guarantee of commercial success, as Seattle-based Dendreon Corp. famously demonstrated with its once-lauded cell-based immunotherapy treatment Provenge (sipuleucel-T). It entered bankruptcy protection in November, and Valeant Pharmaceuticals International Inc. is in the process of picking up the product and other assets for $495 million.
Prostvac therapy comprises a prime-boost regimen, based on the sequential administration of two engineered poxviruses, vaccinia and fowlpox. Each encodes prostate-specific antigen (PSA), as well as three immuno-stimulatory molecules, B7.1, ICAM-1 and Lfa-3. Patients receive a single shot of the vaccinia-based vaccine, followed by six booster shots of the fowlpox-based construct.
The phase III trial, which is being performed under a special protocol assessment (SPA) agreement with the FDA, completed recruitment in December. Patients are receiving either Prostvac or Prostvac administered along with granulocyte-macrophage colony-stimulating factor (GM-CSF) or placebo.
The timing of the readout is unclear. "Basically we are waiting for events deaths to happen," Sørensen said. The statistical plan requires 534 events in order to achieve significance. Positive interim analyses three are built into the protocol could shorten the duration. "The first one is not expected to show anything," Sørensen said. "We do not expect to see any side effects or negative results." The subsequent analyses could potentially reveal an efficacy signal strong enough the stop the trial.
THE PAYOFF
For Bavarian Nordic, the deal vindicates its long-standing commitment to cancer immunotherapy. The company was active in the field long before it was either popular or profitable. "Nobody believed in it at that time," Sørensen said.
Dendreon's underpowered sales performance had weighed heavily on the Danish firm and scuttled its chances of getting a deal for Prostvac before beginning the phase III study. The company took the bold step of raising $125 million in a discounted rights issue in order to fund the phase III study itself. "We made the right decision," Sørensen. "It was very brave because it was a huge bet compared to the size of the company at the time."
Investors who participated in that transaction are sitting pretty. The discounted offering was priced at DKK54 (US$8.06) per share. The stock (COPENHAGEN:BAVA) closed Wednesday at DKK286, up DKK74.50.
The agreement itself is no great surprise. "It is based on negotiations, which have been ongoing for quite a while now," Bowers said. But it adds Prostvac to what is arguably the industry's leading immuno-oncology pipeline. The potential for combining the vaccine with other BMS products was underlined late last month, when data from an National Cancer Institute-sponsored phase I trial in 30 patients with mCRPC showed that combining Prostvac with the CTLA-4 inhibitor Yervoy (ipilimumab) conferred a substantial survival advantage.
Historically, the predicted median OS with docetaxel the only FDA-approved product with a survival benefit when the trial began was 18.5 months. The combination therapy led to an average OS of 31.3 months across all dose cohorts. At the highest dose of Yervoy (10 mg/kg), it rose to 37.2 months. Moreover, the 80-month survival rate in the latter cohort was 20 percent.
"The exciting thing about that is there is a tail in overall survival," Jim Breitmeyer, president of Bavarian Nordic's cancer immunotherapy business, told BioWorld Today.
Those data were not a deal-maker in themselves, however. Bavarian had also conducted extensive preclinical research in animal models, on how to combine and sequence Prostvac with various immune checkpoint inhibitors. "We were seeing unprecedented effects, up to and including 100 percent survival, with combinations," Breitmeyer said. "We give the vaccine first, to activate the immune system, and then you give the checkpoint inhibitor to uninhibit the immune response, so it expresses itself at its full potential in the tumor."
The company also gained some insights into the mechanism underlying the apparent synergy. "We've just presented some data to show that our form of active immunotherapy increases PD-L1 expression in a tumor," Breitmeyer said.
That could be significant, as PD-L1 programmed death ligand 1 appears to be a marker, determining whether or not a tumor is immunogenic. PD-L1 negative tumors tend to have a lower response to checkpoint inhibition than PD-L1 positive tumors. Prostvac could, therefore, help to prime patients for checkpoint inhibition therapy and drive up overall response rates. The two companies are now moving into discussions about how to combine Prostvac with BMS's large and growing pipeline of checkpoint inhibitors.
"We're very excited about the BMS anti-PD-1 antibody, and we're also interested in their anti-LAG-3 antibody," Breitmeyer said.