Biotech as business: the Bavarian Nordic story
If there is one thing that successful Danish companies have in common with one another, it is the clear recognition of abundant opportunities outside the motherland.
“Danish companies’ strengths lie in their ability to build on what they have inherited from Denmark but to also look outward and be international,” says Anders Hedegaard, CEO of Bavarian Nordic. His company was established through a partnership with the US government.
With only two years experience of producing biological products in Denmark, building up competencies in a short time has enabled Bavarian Nordic to secure $1 billion in contracts from the US government.
“Although we might have started as a more traditional biotech company, smallpox vaccine orders from the US government have helped us to make the leap towards an industrial scale pharmaceutical company,” explains Hedegaard. After the Food and Drug Administration (FDA) approval and the clearance to provide the product in 2010, the company had to be steered into a more industrial mindset to deliver on budget.
Bavarian Nordic also acquired the rights to develop a vaccine for prostate cancer from the National Cancer Institute (NCI) in 2008. The vaccine is in Phase III trials after Phase II results showed significant improvements in overall survival in a patient group that otherwise had no good alternatives.
In addition to getting more contracts from the US government for the smallpox vaccine, “Bavarian Nordic’s strategy is to run Phase III of the prostate cancer vaccine until data readout and then hopefully, based on attractive data, we will seek appropriate partners, such as a global pharmaceutical company with the ability to achieve a worldwide product launch,” says Hedegaard.
It was a complete focus on execution that enabled Bavarian Nordic to not only survive the typical pitfalls of biotech, but to double its turnover and significantly improve its bottom line. And now it’s delivery time. Bavarian Nordic has decided to merge and consolidate their production facilities in Denmark in order to supply both the smallpox and the prostate cancer vaccines.
In spite of all of Bavarian Nordic’s achievements, communicating this success to investors has been more difficult. “The government business gives a huge advantage in many ways, but the challenge is to get investors to accept it and rank it on par with a normal commercial market,” explains Hedegaard. Execution remains the priority to ensure a sustainable business. Bavarian Nordic has a profitable smallpox business but is still shepherding its prostate cancer vaccine candidate through Phase III trials and approval.
“The cash flow that comes from a business in infectious diseases gives us a strong market position,” explains Hedegaard, who hopes that this will enable Bavarian Nordic “to expand further, either in infectious diseases or cancer. Having infrastructure in place and commercialized products will help us open the business in new areas.”