Founder, major shareholder, and Chairman of the board in Bavarian Nordic, Asger Aamund, wonders why the market has not reacted to a string of good news for the company lately. The company has recently won approval for small pox vaccine, Imvanex, from EU authorities, and at the end of May the company published promising data from a phase II trial with cancer vaccine, CV-301.

“You shouldn’t put ethical terms into the stock market. All you can say is that the stock market stakes out its own course, and it really does, is all you can conclude. When the stock market has completely dismissed the value of our entire cancer program, it is bound to be reflected in the share price,” Asger Aamund says in an interview with Medwatch.

His private investment firm, A.J. Aamund, is under heavy pressure due to the long-time low stock market price of the Bavarian Nordic share.

He points out that analysts largely agree that the current price does not reflect the true value of the company, but he also concedes that it is the investors who have the final say.

Prostvac crucial

When Bavarian Nordic in the spring of 2011 failed to agree on a licensing deal for Prostvac, the share price plummeted in the weeks after. Concerning the reason for opting out of a licensing deal for Prostvac, Asger Aamund says:

“The conditions we ended up being offered were simply not god enough. It would have been daylight robbery, had we said yes.”

He also explains that the company was in talks with a number of potential, US investors at the time. But the general message from these was that “it would be mad of us to take our greatest asset and give away half of it at a low price,” as he puts it.

At the time, the company had won approval for a development plan from US authorities, FDA, which only required a patient population of 1,200 patients against the normal 5,000-6,000. Moreover, the FDA told Bavarian Nordic that if clinical results were half as good as the ones achieved in a phase II study, it would be enough for approval of the drug.

“The US investors told us that it was a sure thing for us to do on our own, and that we should invest in it. They also said that if we did it, they would be happy to invest in Bavarian Nordic. We took a deep breath and said: Ok, we’ll go it alone. And the market went completely crazy, and Bavarian Nordic’s value went from DKK 3.4-3.5bn (USD 610-628m) to almost nothing in no time flat,” explains Asger Aamund, before elaborating:

“So when we had to raise the DKK 800m (USD 144m) through a share issue, it was at horrible rates. It was obviously great for the US investors who joined for very little money, and they knew that. It also meant that the market developed a generally negative attitude and felt dooped. A lot of people figured they were going to make a lot of money,” he says with reference to 2010 when Bavarian bagged “a couple hundred millions”.

“Back then, the expectation from the market was that it was a sort of bridge over investment where you went through the pearly gates, and we secured a deal that gave everyone a lot of money. The market felt dooped, and a lot of people still see it that way. So they have turned their backs on Bavarian Nordic, and we are suffering from that. But at the moment we are securing more and more international investors, and it will even out along the way,” the Chairman points out.

Stock price should have increased

As an example of the market’s lack of trust in the company, he mentions data presented in May for CV-301 for the treatment of colon cancer.

“It would normally lead to the share gaining 30-40 points, but in the end it dropped instead, because the negative investor environment says, how will we finance this? Then you enter a period where there’s a certain hostility towards your share, and we are definitely seeing that at the moment,” says Asger Aamund, before summing up his view on the development of the company.

“We have delivered all the way through and have achieved our goals, even surpassed them, and we have added a lot of hidden value to the company, but the stock market doesn’t react to that. The stock market is not interested in buying Bavarian Nordic shares,” he says.

“In three years, we should be on the market with Prostvac and be well on the way with CV-301, plus we expect a pretty big sale of our small pox vaccine. We are putting the final touches on a freeze-dried version with a longer shelf-life that the Americans are very interested in. They will stockpile these new vaccines. We can deliver them, and we also expect that European governments will feel compelled to replace the old small pox vaccines which are associated with a range of side effects. It looks very promising, and I cannot imagine a scenario in which Bavarian Nordic is not infinitely more valuable in three years,” he says about the future of the company.

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- translated by Martin Havtorn Petersen

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