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Update from the Board on clinical strategy and capital structure

(Oslo, Norway, 31 May 2016) Bionor Pharma ASA (OSE:BIONOR) announces that the Board of Directors has completed its review of the company’s strategy and financing plans in accordance with the considerations presented in stock exchange announcement of 28 April 2016.

The company maintains its focus on HIV immunotherapy and overall strategy to further advance Vacc-4x in clinical development in combination with other medicines to develop a functional cure for HIV. The timing and details in the clinical development program have been revised in light of the company’s cash position and market capitalization, and a two-step funding plan is outlined below.

Clinical strategy
Bionor deploys a “Shock and Kill” approach for achieving a functional cure for HIV infection. This reflects a prevailing view in the HIV scientific community that a combination of different compound classes is likely required to achieve long-lasting viral control in the absence of ART, the current standard of care for HIV-infected patients. As part of this approach, Bionor will continue investigating the combination of Vacc-4x with a latency reversing agent (romidepsin, supplied by Celgene Corporation; marketed as Istodax®) to first educate the immune system to recognize and kill infected cells, followed by an activation of the latent HIV in infected cells to make them visible to the immune system. It is expected that a third agent will be needed for the purpose of further improving the immune response.

Bionor believes that a crucial step in validating this approach was taken with the REDUC clinical trial, which demonstrated that Vacc-4x led to improved control of HIV in the blood after the virus had been “shocked” out of its latent reservoir by romidepsin, and met its primary end point by leading to a reduction of the latent HIV reservoir (See stock exchange announcement of 21 December 2015). 

Based on the REDUC data, Bionor is currently planning BIOSKILL, a multicenter placebo-controlled proof of concept Phase II clinical trial, as well as an exploratory Phase I/II trial to evaluate an immune regulating agent administered in a triple agent regimen with Vacc-4x and romidepsin (BIONAB). Finally, a trial is planned to document the effect of the adjuvant GM-CSF on Vacc-4x immunogenicity. This is a clinical trial planned to provide data requested by the FDA.

As previously announced, Bionor has been granted approximately NOK 20 million from Skattefunn for the BIOSKILL clinical trial, and the Research Council of Norway has granted the company up to NOK 9.2 million to partially fund the BIONAB trial. The company will continue to pursue non-dilutive funding.

The company believes that successful completion of these trials will lead to a major value inflection point and partnering opportunities. Bionor retains full ownership rights of Vacc-4x and deploys a robust intellectual property strategy, currently including 67 patents granted in 40 countries and 89 patent applications pending worldwide directed to Vacc-4x compositions and uses, including several new patent filings with REDUC clinical trial results applied for in 2015 and 2016, i.e., the upside potential from partnering or licensing remains with the company’s shareholders.

Capital structure
Based on the clinical strategy outlined above, Bionor’s capital need is now estimated by the Board to approximately NOK 230-270 million, which covers the period from the third quarter of 2016 to the fourth quarter of 2019 (14 calendar quarters); approximately nine months after the expected announcement of BIOSKILL topline results in the first quarter of 2019. Previously, Bionor estimated the capital need until the first quarter of 2019 to NOK 375-425 million (11 calendar quarters).

The significantly reduced, estimated capital need is based on a planned, major reduction of the core cost base for the period, a slightly narrowed clinical development plan, and less focus on further expanding the company’s asset pipeline. Bionor will seek to reduce the costs for running the company by relocating to other facilities in Norway, Denmark, and the U.S. In addition, an organizational review is currently ongoing. As part of this review, it has been decided not to replace Søren Keller, SVP and Chief Operating Officer, who will leave the company by 1 June 2016.

The Board has considered various transaction structures to fund the continued development of the company’s assets. Taking into account the need for funding, execution risk, transaction costs and cash position of the company as well as the clinical status of Vacc-4x, the Board has decided that the company’s long-term funding initially will be covered by an equity offering to fund the company through the following 6-12 months. Further details on the timing, size, and structure of this transaction will be disclosed in due course. Concurrently, the Board will investigate the possibilities of securing the remainder of the long-term capital need through equity, non-dilutive means, or a combination thereof. Enrollment in each of the clinical trials will only be initiated when funding has been secured to complete the trial. Based on this new funding strategy, enrollment of first patient in BIOSKILL is planned for the first quarter of 2017.

Per S. Thoresen, Chairman of the Board of Bionor said: “We are now close to having all elements in place to ensure the continued success of Bionor – a strong asset in Vacc-4x, a new board and smaller management team, a company strategy endorsed by the new board and a clear picture of our funding need going forward. It is satisfactory that we significantly reduce our cost base without impairing the clinical activities considerably. I am also satisfied, that Celgene continues to support the company by supplying romidepsin for the BIOSKILL trial. This is a yearlong relationship that started in 2011 with Celgene’s provision of lenalidomide for our IMiD trial. Now, we are focusing all our efforts to securing the future financing of the company, advancing our asset and strengthening trust among shareholders, all to the future benefit of the millions of people around the world who are suffering from HIV.”

Further information
Per S. Thoresen, Chairman of the Board of Directors, +47 906 14 620
Unni Hjelmaas, Acting CEO, +47 915 19 651, uh@bionorpharma.com
Jørgen Fischer Ravn, VP Investor Relations & Communications, +45 2030 3903, jfr@bionorpharma.com

About Bionor
Bionor Pharma is a Norwegian biopharmaceutical company focused on advancing its proprietary therapeutic vaccine Vacc-4x in combination with other medicines toward a functional HIV cure. The company believes it has first mover potential based on clinical results to date and early adoption of now recognized clinical strategy. In December 2015, Bionor announced that the HIV ’Shock & Kill’ trial REDUC with Vacc-4x and romidepsin successfully met its primary endpoint by reducing latent HIV reservoir and further demonstrated control of viral load. Bionor currently retains full ownership rights to Vacc-4x, i.e., the upside potential from partnering or licensing remains with the company. Bionor is listed on Oslo Børs (OSE:BIONOR). More information about Bionor is available at www.bionorpharma.com.

Announcement as PDF.