September 28, 2017 / 9:51 AM / a year ago

Vaccine order boosts Bavarian Nordic after cancer drug flop

COPENHAGEN (Reuters) - Biotech group Bavarian Nordic said it expected to win more contracts in the United States for its smallpox vaccine after securing an order from the U.S. government stockpile.

The Danish company said late on Wednesday it had won the order for its freeze-dried smallpox vaccine worth potentially $539 million from BARDA, a division of the U.S. Department of Health and Human Services.

The deal was a boost for the Danish company, coming just weeks after its prostate cancer drug candidate suffered a major setback.

“This should calm the market further with regards to the failed Prostvac phase III-study,” Sydbank analyst Soren Lontoft Hansen, said referring to the cancer drug Prostvac disappointment. He has a ‘buy’ rating on the stock.

Bavarian’s shares rose as much as 5 percent on Thursday, partly due to a higher-than-expected vaccine dose price. They are still around 35 below their peak level before the news of the failed cancer drug study.

“We are expecting that they (the U.S. Biomedical Advanced Research and Development Authority (BARDA)) have a desire to expand the emergency stock for the smallpox vaccine and therefore we also expect to see more contracts in the future,” Chief Financial Officer Ole Larsen told Reuters.

This is Bavarian’s third such award to manufacture vaccine in bulk and the two prior orders from BARDA totaled $233 million, which the firm has already received.

The new contract will cover around 13 million doses at a price of around $48 per dose, Larsen said, underlining that uncertainties around price and volume still remained.

The price is significantly higher than the $35 expected by some analysts.

Bavarian Nordic will also invest in the construction of a manufacturing line at its facility in Denmark with a possible co-investment from BARDA to secure future production capacity.

The order would be for a new freeze dried formulation of the vaccine with a shelf life of more than five years, which will replace the liquid-frozen formulation with a three-year durability of Imvamune currently stockpiled.

The U.S. government has a long-term strategy to provide sufficient non-replicating smallpox vaccine to protect 66 million people, representing 132 million doses of Imvamune, Bavarian said on its web page.

Reporting by Stine Jacobsen, editing by Terje Solsvik and Jane Merriman

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