Kerrisdale Capital Releases Short-Thesis Report on Bavarian Nordic A/S and Announces Conference Call Schedule

Detailed Analysis Deflates the Hype Surrounding an Ineffective "Cancer Vaccine"

Aug 03, 2015, 06:01 ET from Kerrisdale Capital Management, LLC

NEW YORK, Aug. 3, 2015 /PRNewswire/ --

  • Kerrisdale believes that Bavarian Nordic's investigational prostate-cancer vaccine, Prostvac-VF, is ineffective.
  • The control group in the vaccine's Phase II study was meaningfully older and sicker than the treatment group and accordingly experienced unusually bad outcomes. The underperformance of the controls allowed the unimpressive treatment-group results to look good by comparison, but this outcome will not likely repeat itself in Phase III.
  • More recent data, including a trial combining Prostvac with a checkpoint inhibitor, likewise show mediocre survival and the absence of any clinical benefit.

Kerrisdale Capital ("Kerrisdale"), a private investment manager, has published an investment report explaining its short position in Bavarian Nordic A/S ("Bavarian Nordic") (OMX: BAVA, OTC: BVNRY), a $1.3B Danish vaccine-maker whose experimental prostate-cancer vaccine, Prostvac-VF ("Prostvac"), is currently undergoing a Phase III clinical trial.

Bavarian Nordic claims that Prostvac has produced "the most pronounced survival to date in prostate cancer," but Kerrisdale's research indicates that Prostvac's purported benefits stem from misleading comparisons, not real efficacy. Kerrisdale's report also highlights some of the risks facing Bavarian Nordic's core business of selling an unproven smallpox vaccine to the US government for emergency stockpiling, even as new research demonstrates that a far smaller stockpile could cover just as many people.

The full report can be found here:

Prostvac's Purported 8.5-Month Improvement In Survival Is The Result Of A Bad Control Group

In the early 2000s, a now defunct company called Therion tested Prostvac in minimally symptomatic men with metastatic castration-resistant prostate cancer (mCRPC). The study was a failure. The original goal of improving progression-free survival, the time elapsed without significant deterioration in disease markers, was not met and Therion went out of business.

Bavarian Nordic, however, gained control of Prostvac and dubbed it a success, since a subsequent follow-up analysis showed that the treatment group experienced an improvement in median overall survival of 8.5 months, higher than the control group. However, this gap in survival stemmed not from good results in the treatment group but from bad results in the placebo group. The placebo group had notably worse baseline prognostic factors and a 7.5-year higher median age than the treatment group, giving Prostvac a sizable and unfair head start. Furthermore, data from other studies focusing specifically on typical survival times for older men with late-stage prostate cancer suggest that most or all of the 8.5-month difference could be attributable to age alone.

Early Combination-Therapy Data Confirm The Absence Of A Meaningful Survival Benefit

More recent efforts to demonstrate improved survival in patients receiving both Prostvac and the immunotherapeutic cancer drug Yervoy only further underscore Prostvac's inefficacy. In a 30-patient trial with no control group, across a range of Yervoy dose levels, median survival was 31.6 months – little better than the ~30-month survival seen over and over again in the control groups of other late-stage prostate-cancer studies. Since Yervoy itself is clearly active, the absence of any incremental benefit from adding Prostvac to it further suggests that the vaccine accomplishes nothing. Moreover, a rapidly growing body of work shows that checkpoint inhibitors primarily act by unleashing immune responses against mutated "neoantigens," not normal proteins like the one that Prostvac targets. Thus any hopes that combination treatments will rescue Prostvac from weak standalone Phase III data are unfounded.

"While misleading Phase II results have allowed Prostvac to masquerade as a plausible treatment, when put in proper context the evidence implies the opposite," said Sahm Adrangi, Chief Investment Officer of Kerrisdale Capital. "Based on the scientific literature, Prostvac does not produce unusually good survival outcomes, does not elicit sizable T-cell or antibody responses, does not improve progression-free survival, does not cause meaningful declines in PSA levels, and does not even reduce the rate of increase in PSA levels. Prostvac appears to be yet another ineffective cancer vaccine in a long line of ineffective cancer vaccines."

Conference Call Schedule

Sahm Adrangi, Chief Investment Officer, and Shane Wilson, Analyst, will host a conference call today at 11:00am EDT / 5:00pm CEST to discuss the company's report.

To participate in the conference call, please dial 855-780-5918 (domestic), 224-633-1732 (international), or 80-88-42-84 (Denmark) and reference the access code 2191536.

A replay of the call will be available following the call. To access the replay, contact  

About Kerrisdale Capital

Kerrisdale Capital Management, LLC, is a fundamentally-oriented investment manager that focuses on long-term value investments and event-driven special situations. Kerrisdale has $330 million in assets under management and is based in New York City.

Agnes Cao
Kerrisdale Capital 

SOURCE Kerrisdale Capital Management, LLC