Bavarian Nordic — Update 16 February 2016

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Imvamune transition to freeze-dried formulation could prompt new orders: Bavarian Nordic received a US$133m order from the US government in July 2015 to supply bulk Imvamune to maintain the current stockpile. With completion of the conversion process to the next generation freeze-dried formulation (which has a longer shelf life), a new tender from the US government covering the conversion of stockpiled bulk active into the new formulation and/or further doses is anticipated in 2016. Precise timelines remain uncertain for ex-US government orders. However, there is potential for a follow-on contract from the Canadian government (the latest contract for US$6.4m was secured in October 2015 for delivery of 143,000 liquid-frozen doses in 2016) as well as first orders from European governments against a background of increased alertness to the ongoing terror threat. We note that ex-US orders will likely be lower volume but will benefit from better pricing.

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Phase I data for MVA-BN RSV and progress into Phase II: Initial results of a 63-pt Phase I study in healthy adults are expected mid-2016. Safety, cellular and antibody responses are being measured for up to 34 weeks in this trial. Given that the vector is well characterised and is the same as that used in Imvamune, no safety concerns are expected. Confirmation of the safety and immunogenicity profile in Phase I should support advancement into Phase II development in H216, and determine the size of the Phase II programme. Trial design and endpoints may vary depending on the target population. Two trials in different populations (where the risk of severe RSV-associated lower respiratory tract infections is highest) are planned: one in the elderly and adults at risk of RSV and the second in children aged under five years old. IPO proceeds will provide funding for Phase II development, although given the potential size of the opportunity in RSV, Bavarian Nordic may seek a commercial partner for MVA-BN RSV in the longer term. RSV is a significant market opportunity with high unmet need: the virus is ubiquitous, highly contagious and transmitted via direct contact, infecting human airway epithelial cells and there are currently no vaccines approved. In the US alone, RSV infection is estimated to cause 177,000 hospitalisations annually in the elderly, more than in infants (estimated at 75,000-125,000 per year).

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Contract extensions possible under J&J Ebola co-development and supply deal: The 2014 deal with Janssen (J&J) for co-development of a prime boost regimen for Ebola comprising MVA-BN Filo in combination with J&J’s AdVac technology (Ad26.ZEBOV) has been a significant contributor to 2015 revenues. Up to end-September 2015, DKK379m of revenues have been recognised along with deliveries to Janssen. The deal includes a supply agreement for production and delivery of bulk material; 2m doses have been produced for delivery by the end of 2015. Ongoing clinical trials of this prime boost regimen include a UK/France Phase II study in 612 healthy adult patients, a 1,188-pt Phase II multi-site African trial and the 728-pt EVOBAC-Salone Phase III trial in Sierra Leone; the latter trial is expected to read out in 2016.

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Potential to expand the relationship with J&J: In addition to the Ebola deal, Bavarian Nordic has two other collaborations with J&J. In December 2015, a US$171m licence agreement was signed for exclusive rights to Bavarian Nordic’s MVA-BN technology to develop a prime-boost vaccine regimen (in combination with J&J’s AdVac technology) targeting cancers induced by human papillomavirus (HPV). J&J also retains an exclusive option to licence MVA-BN for two additional undisclosed infectious disease targets under its October 2014 evaluation agreement. Thus there may be potential for these options to be exercised during 2016. The range of potential targets is broad, with J&J’s most recent corporate pipeline overview1 highlighting its priority areas in infectious disease including: HIV, RSV, flu and hepatitis (HBV and HCV).

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PROSPECT interim analyses loom; other studies to broaden the Prostvac data package: The 1,297-pt Phase III PROSPECT study of Prostvac as monotherapy in asymptomatic or minimally symptomatic mCRPC is fully enrolled, with top-line data anticipated in 2017. The trial is event driven and includes three interim analyses, the first of which could occur imminently. Nevertheless, while there is potential for the trial to be stopped early, we and management expect the study to continue until completion. In parallel, Bavarian Nordic is running five Phase II studies in collaboration with the NCI in earlier disease (localised, neoadjuvant and non-metastatic) and/or in combination with other therapies (enzalutamide, flutamide). Data read out is expected in 2016 from the combination trial plus enzalutamide in non-metastatic prostate cancer and a monotherapy trial as neoadjuvant in localised disease. The results of these studies will help inform on Prostvac’s potential benefit and hence positioning in earlier disease settings, which could help to expand its market potential. With this in mind, and to gain a greater understanding of Prostvac’s mechanism and efficacy in combination, Bavarian Nordic and partner Bristol Myers Squibb (BMS) will initiate two additional Phase II trials in combination with BMS’s immune checkpoint inhibitors in 2016. The planned trials are a 75-pt study in combination with ipilimumab as neoadjuvant therapy, and an NIC sponsored 28-pt trial in combination with ipilimumab +/- nivolumab

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Plans underway for CV-301 NSCLC trial, with other indications to follow: CV-301 has potential in a broad range of tumours, although Bavarian Nordic has prioritised development in lung cancer. This shift away from prior development, which has included both colorectal and bladder cancer, is based on recent advances in immuno-oncology and the potential to combine CV-301 with a PD-1 (programmed death-1) checkpoint inhibitor to potentially improve efficacy.2 Further down the line, development in bladder cancer and colorectal cancer may also be pursued. There are a large number of lung cancer patients who could benefit from a CV-301/checkpoint inhibitor approach, and potential for trials based on shorter endpoints such as overall response rate and progression-free survival to rapidly establish proof-of-concept. Bavarian Nordic has developed an improved CV-301 construct based on MVA-BN (rather than vaccinia), which has improved manufacturing yield and immunogenicity. It plans to progress this new construct progress into Phase II trials in 2016 as part of a combination development strategy with a checkpoint inhibitor. Two PD-1 checkpoint inhibitors are approved by the FDA: BMS’s Opdivo (nivolumab) and Merck’s Keytruda (pembrolizumab). Paying for an approved therapy as part of a clinical trial could be expensive, although with a successful fund raise this should be well within Bavarian Nordic’s resources.