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Dynavax Technologies Corporation (NASDAQ:DVAX)

Discussion of the Complete Response Letter from the FDA regarding BLA for HEPLISAV

February 25, 2013 9:00 am ET

Executives

Jennifer Lew - Principal Accounting Officer and Vice President of Finance

Dino Dina - Chief Executive Officer and Executive Director

J. Tyler Martin - President, Chief Medical Officer and Director

Analysts

Philip Nadeau - Cowen and Company, LLC, Research Division

Thomas Wei - Jefferies & Company, Inc., Research Division

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Liisa A. Bayko - JMP Securities LLC, Research Division

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Megan McCloskey - MLV & Co LLC, Research Division

Operator

Good day, everyone, and welcome to the Dynavax conference call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Jennifer Lew, Dynavax Vice President of Finance. Ms. Lew, Please go ahead.

Jennifer Lew

Good morning. I'm Jennifer Lew, Vice President of Finance, and I'd like to thank you for joining us today to discuss the complete response letter to Dynavax received from the FDA regarding its BLA for HEPLISAV.

Participating with me on the call today are Dr. Dino Dina, CEO; Doctor Tyler Martin, President and Chief Medical Officer; and Michael Ostrach, Vice President and Chief Business Officer.

Before discussing today's topics, we need to advise that we will use forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially due to the risks and uncertainties inherent in our business. Examples of these forward-looking statements include, but are not limited to, the timing of the company's meeting with the FDA; the FDA's feedback and related company plans to respond to the FDA Complete Response Letter for the BLA for HEPLISAV; whether or not additional clinical or nonclinical studies will be required to obtain FDA approval; the resources plan to be devoted to the BLA for HEPLISAV; sufficiency of data to be submitted and data that may be generated and submitted to FDA; timing and potential outcome of data-generating activities; regulatory submissions and decisions by the FDA on the BLA for HEPLISAV; and other difficulties or delays in clinical development, manufacturing, regulatory approval, market acceptance, and commercialization of HEPLISAV. These forward-looking statements are based on the information available to us today. We may not actually achieve the plan, carry out our intention or meet the expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statement. Actual results or events could differ materially. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information, please see the forward-looking statement section in today's press release and the Risk Factors section of our quarterly report on Form 10-Q. I'd now like to turn the call over to Dino Dina, our CEO.

Dino Dina

Thank you, Jennifer. As we disclosed in the press release we issued this morning, we received a complete response letter from the FDA regarding our BLA for HEPLISAV. In the complete response letter, the FDA specified that the BLA we submitted, seeking an indication for adults aged 18- to 70-year-old, cannot be approved without additional safety data, and the FDA outlined their reasons for this response.

Our comments on this call will be based on our current understanding of these issues and the steps that may be necessary to address them. Please keep in mind that we've only just received the letter, and we have not been yet in the right discussion with the FDA for clarification.

In the complete response letter, the FDA expressed 2 primary concerns. First, sufficient data has not -- safety data has not been established to support the proposed indication of HEPLISAV in adults aged 18 to 70 years old. As a result, the agency indicated that further clinical evaluation of safety in this broad age group will be necessary prior to licensure and -- excuse me, I'm sorry. This broad age group will be necessary prior to licensure and the design and size of an additional safety study will be required -- will require discussion with the FDA.

Second, the need for additional data from our process validation program and pertaining to a -- from our manufacturing controls and facilities. Let me briefly touch on each of these matters.

The FDA has told us that additional safety information will be required for us to reach approval for a broad indication. In part, we believe this is driven by their expressed ongoing concern that novel adjuvants may cause rare autoimmune events, of course, in addition to the vote at VRBPAC meeting.

However, we believe the door remains open for a more focused label for HEPLISAV with the safety data that we currently have. Specifically, FDA has expressed their willingness and interest in continuing the discussion about what information is needed to support a more focused use of HEPLISAV, stating that the safety data required to support licensure will depend on the indication of HEPLISAV and a favorable risk-benefit determination associated with that specific indication.

We will request a meeting with the FDA to discuss the CRL, and we believe the meeting can take place within the next 6 weeks. Our attack is to gain a better understanding of the specific issues and implement plans to address them. We intend to seek a path forward towards approval in a more focused population, which may be achievable without an additional clinical study. And these may include, once we gain clarity from FDA, pursuit of the chronic kidney disease population, adults over age of 40, and other groups that who have not responded well to currently available HBV vaccines, where HEPLISAV have been shown to provide significant benefit.

Furthermore, FDA has asked to supervise additional data from our process validation program and to clarify information on our manufacturing controls and facilities related to the assurance of the quality of the commercial product. We believe this information is addressable, but until we meet with the -- meet with the agency, it is difficult to make any predictions about the exact timeframe for our response. Within the next few days, we will publish our financial results for the fourth quarter and the year, which end -- of 2012, once the audit is completed. We anticipate finishing the year with approximately $125 million in cash.

Based on the work ahead of us, we anticipate maintaining a significant commitment to clinical, regulatory and manufacturing activities in the near-term. That said, we do not expect to establish a commercial organization until we are closer to approval. And it is certainly our goal to continue our annual spend levels consistent with prior years, which has been roughly $60 million a year, although we may need to adjust this once we have more definitive plans.

As I mentioned earlier, Dynavax plans to meet with the FDA within the next 6 weeks to discuss the steps necessary for approval of HEPLISAV. Following this meeting, we hope to understand the types of indications FDA is willing to consider at this time, and be in a better position to estimate the time and resources necessary to satisfy FDA requirements for approval.

We plan to do all we can to move the process forward in a swift and proper fashion, and we will put our full energy into addressing those issues.

In closing, let me also take a moment to remind you that our marketing authorization application is under review by the EMA in Europe. We continue to pursue HEPLISAV approval and commercialization in Europe, and our timelines are proceeding according to plan. This concludes our prepared remarks. Operator, you may now open the call to questions.

Question-and-Answer Session

Operator

[Operator Instructions] The first question is from Phil Nadeau of Cowen.

Philip Nadeau - Cowen and Company, LLC, Research Division

It seems like your ability to get an abbreviated path forward, or path that doesn't include another trial, will really hinge on your ability to convince the FDA that there's a more favorable risk-benefit in either the CKD population or those patients over the age of 40. Could you give us some idea of what additional data or analysis you'd be able to put in front of the FDA to make that point? And how confident do you feel that that point can be made?

Dino Dina

So let me divide that into 2 parts. With respect to a population older than 40, you may recall that that was the nature of the agreement that we reached with the FDA, with respect to the removal of a clinical hold, and that all the arguments related to the increased benefit that those populations would receive because of the improved immunogenicity of HEPLISAV in those populations, which would provide roughly a 30% differential in ability to protect people -- as compared to Engerix, with 2 versus 3 injections -- were made and accepted at that time. Now, that doesn't mean that those would still be seen as valid and definitive today, but that certainly is the starting point. And all of those data are in the hands of FDA, and were submitted with their own separate analysis in the course of the BLA that is under review. With respect to CKD, which is the second point, we had an agreement with FDA that that would be submitted separately as an sBLA. In view of not having received an approval for the general population, we now need to revisit under what specific structure the CKD data can be submitted and whether that's a part of the existing BLA or is a separate BLA, and how exactly FDA would like to see those data. Those consist of approximately 500 additional individuals distributed 1:1 to HEPLISAV and Engerix. And those data have been reported and have shown a clear superiority of HEPLISAV with 3 injections versus 8 injections of Engerix. So I believe that there is a reasonable basis for claiming that we do provide advantages, and that these populations receive increased benefit as compared to the general population that -- that's all part of the discussion that we need to have with them.

Philip Nadeau - Cowen and Company, LLC, Research Division

Okay. And then just one follow-up. I appreciate that you've just received a letter and it does seem to be quite vague. But the VRBPAC panel was on November 15, so it's been about 3 months since the panel. Have you had any substantial dialogue with the FDA over those 3 months? And does that dialogue kind of give you any additional understanding of their ability -- of their willingness to locate one of these abbreviated path -- paths forward?

Dino Dina

We have had a significant additional dialogue with FDA, including meetings during which potential, more restrictive indications were presented and proposed by us for their review. As you recall, we reported at JPMorgan that FDA had expressed a willingness to review our proposals seriously. I believe that that commitment is unchanged. What has changed is that we had hoped to bring those discussions to closure in the course of the PDUFA timeline. And FDA clearly has decided to put a stop to the clock and have those discussions in the context of a complete response letter. And that triggers, of course, a set of steps and timelines that are going to be somewhat time-consuming and therefore, will delay approval. But that's where we are today.

Operator

The next question is from Thomas Wei of Jefferies.

Thomas Wei - Jefferies & Company, Inc., Research Division

Just on the over 40 indication, can you clarify for me again, did the original filing that you made contain a separate set of efficacy and safety data tables formatted specifically to look at the over 40 indication or is that something that you added post the panel? Or as of this point in time, does the FDA actually not have a complete set of data tables for that indication?

Dino Dina

Tyler?

J. Tyler Martin

The FDA has all of the data for that indication. The data was not presented separately in tables for the over 40 population because the indication that was proposed was 18 to 70. They have all the data, and of course, they have the ability to conduct whatever analysis they'd like to with that data.

Thomas Wei - Jefferies & Company, Inc., Research Division

I see. So they -- all the data tables that you submitted were for 18 to 70. Within that, of course, there's the data for all the patients over 40, but you did not separately provide them data tables for over 40. So that's something that you could do as part of the refiling, for instance?

J. Tyler Martin

Yes, that is something we could do.

Dino Dina

On the other side, they have seen those data analyzed separately because those were part of the submissions that we provided in the course of the consistency lot results that we submitted in that those were entirely driven by HBV-16, which resolve over 40. So I don't know how formal we want to get about this but the FDA has all the data cut anyway you'd like to.

Thomas Wei - Jefferies & Company, Inc., Research Division

I see. They have that separate study, obviously, analyzed. But then there were other studies that looked at over 40 that would need to be pulled into that analysis.

J. Tyler Martin

Yes. So just to be clear, for the 2 pivotal trials, studies 10 and study 16, study 10 included approximately half the subjects over the age of 40, study 16, all subjects were over the age of 40. And those cuts of that data were presented within the various CSRs. The integrated summary of efficacy was integrated for the purpose of the proposed indication, which was 18 to 70.

Thomas Wei - Jefferies & Company, Inc., Research Division

Okay. And so is the -- when we think about the next pathway here, is it -- should we think that the most viable strategy would be CKD? Or is it the fact that most of your data is in the adults over 40? Or could you actually file for both? Or would you propose, maybe filing for 2 separate indications together of CKD and adults over 40?

Dino Dina

Well, all of those options are possible and available. It's just a matter now of reaching agreement with FDA about what's most expedient and what they're willing to consider. We don't have any indications from them so far of where their mind is in terms of what would be appropriate and what they're willing to work with us on. However, it would seem that CKD would be something that they would be willing to consider, and that any indication for population over 40 would certainly fit the definition of a population that would receive the increased benefit. Having said that, given the fact that the latter provided no specific insights into what they are willing to consider, I think we need to be a bit patient and wait until we've completed our discussions before we provide additional clarity on what's doable.

Thomas Wei - Jefferies & Company, Inc., Research Division

And then just something on manufacturing. I guess, I'm a little bit confused here, maybe just to get some clarity, do you think -- is this going to require you making new HEPLISAV and running studies on new batches? And can you also say whether or not the manufacturing comments from the FDA impacts at all the process in Europe and the approvability of manufacturing there?

Dino Dina

Let me separate those 2 questions and make sure I understood your first question correctly. If you're asking whether we will be required to do additional clinical studies, I think that the answer is that based on our reading of the letter, that's clearly not the case. There may be some limited, additional amount of work that we may have to do at our facilities to provide all the data that have been requested, but it's all within our ability to manufacture and produce the surface antigen, the final product. With respect to the -- your second point, let me remind you that we are currently licensed for commercial production of surface antigen in Europe. What remains to be done and finished is to obtain a license for the final product, which contains ISS 1018, which is made in the U.S. And so that's the piece that we are going to have to complete European approval to be able to sell the product. And we, as we reported at JPMorgan, have not seen any aspects in the 120-day questions that would make us believe that we have any showstoppers there, but we will need to continue to submit data in the review in Europe before we can come up with a more definitive view.

Operator

And the next question is from Geoff Meacham with JPMorgan.

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Dino, I just wanted to follow-up with the last question on manufacturing. The first one was -- were any issues in manufacturing a surprise to you in the CRL because you have been talking to the FDA since November? And then, maybe, can you address What data you've already generated to address the manufacturing questions in the CRL? And I have one follow-up.

Dino Dina

I don't believe that there were any surprises. There were a number of iterations. And so, we might have been slightly disappointed that we were asking -- being asked questions that we had already answered, but I think that that's part of the process, and how we've ended up with an interrupted BLA review after the VRBPAC meeting. So there was nothing that was shocking or we had not anticipated in the CMC questions. With respect to the second part of your question, let me ask and not go into any of the details that relate to that because I don't think that would be appropriate at this time.

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

And I guess, the answer may be the same on this question, but can you characterize it though, Dino, as a new analysis or an overall -- is it something that has to do with the entire manufacturing process? Or is it sort of points within the manufacturing process that you feel like you can address the segments of it, but not the continuum of manufacturing?

Dino Dina

I don't think that any of the questions address the nature of the manufacturing process. We've tried to be somewhat specific in our report and state that what their questions relate to is to provide additional information and data that have been obtained in the course of producing commercial loss that FDA can verify that the commercial process has been properly validated and can be reproduced in a meaningful way. And those are data that we have.

Operator

The next question is from Liisa Bayko of JMP Securities.

Liisa A. Bayko - JMP Securities LLC, Research Division

We've been talking a lot about potential limited indications and those over age 40 or CKD, is diabetics something you're thinking about as well? I know that was up big point of discussion prior to this regulatory outcome.

Dino Dina

Yes. It's a good question. Other than defining a specific regimen for people with chronic kidney disease, traditionally, FDA has only approved vaccines based on age groups or regimens. And so it would be novel and unusual to have a specific population defined as part of the approval, specifically for this vaccine. In addition, while the analysis that we've conducted for diabetics in the course of HBV-16 was prospective, and part of our secondary endpoint, we have not discussed with FPA whether or not the number of diabetics in that population would be sufficient to obtain a specific indication. So I would say that at this point in time, the best chance we have to address diabetics would be in the context of obtaining label for people over 40, rather than a specific label for diabetics.

Liisa A. Bayko - JMP Securities LLC, Research Division

That's helpful. And can you just give us a breakdown of the market size for, let's say, adults over age 40, less than, I guess, 70, and then the CKD population, just as a reminder?

Dino Dina

Yes. I'm going to stay really very high level here. CKD represents roughly 20%, 25% of the total existing market in the U.S. People over 40, depending on how you count it, but for monovalent hepatitis B vaccine, they represent in excess of 50% of the total market. And perhaps more importantly, they represent virtually 100% of the potential for growth in the market because of the diabetics indication.

Liisa A. Bayko - JMP Securities LLC, Research Division

Okay. And then, just one other question on sort of the -- I don't know if you called the sensitivity or the resolution, where you sort of reached a threshold where you can say, "Okay, we're not seeing any major safety events in, let's say, 1 out of 1,000 people." What is that point of resolution for both the CKD and then the adults over age 40 group?

Dino Dina

I'm not sure I understand your question entirely. We proceeded based on guidance from FDA for the population over 40 and CKD, with the assumption that a database of roughly 5,000 people would be appropriate. And on statistical grounds, that would allow you to detect a difference in 1 in 1,000. We simply don't know.

Liisa A. Bayko - JMP Securities LLC, Research Division

Great, that was my question. And is 1 in 1,000, I mean is that sort of the range FDA gives you for wanting to approve a vaccine like that? Like, why -- what -- how is the 1 in 1,000 the right level of detection level? And then what is the European requirement on that basis as well?

Dino Dina

Well, as you know, the question was asked of FDA at the panel, and the answer is always, it depends. And "it depends" is based on essentially 2 components: one is the benefit you bring to the population in terms of how serious the disease is; and two, whether there are signals or any notion of biological plausibility for creating a problem that would make you believe that larger numbers would be required. So at the end of the day, it's all in the eye of the beholder. What we know is that in the course of designing the plans for the BLA and the approval of this vaccine, we had FDA concurrence that for a vaccine like this, tested for a population of this type, approximately 5,000 people were deemed to be appropriate, assuming that there were no signals that raised questions about a possible rare event that we needed to explore further. As you saw from the briefing documents we filed and the FDA filed, there was no such signal. And in fact, the database was entirely clean. So I don't see why that number should have changed at this point in time. On the other side, there were comments made by the Advisory Committee that express concern that for an adult vaccine with relatively broad use such as this one, the data that we have obtained may seem somewhat skimpy. And we don't know what that means in terms of how much more we might be required to do.

Operator

The next question is from Katherine Xu of William Blair.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

I just want to ask Thomas' question kind of another way. If, let's say, you decide on -- you and FDA agree on filing for over 40, if that's the case, do you need to reformat many things and then take -- or how long will it take for you to resubmit? Or do you need -- do you not need to resubmit at all?

Dino Dina

Tyler?

J. Tyler Martin

Obviously, we would need to discuss that with the FDA, but it's our current understanding that because they have the data in its present form and it can be analyzed with any age cutoff that one desires, that a reformatting of that submission would likely not be needed. But again, we have to confirm this in discussions that we would with the agency and in a future meeting.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Then if the FDA and you guys decide CKD is the way to go, and then basically, you would need to submit the 17 data, how long would that take?

Dino Dina

I think that we are prepared to complete that submission in the immediate future. I'm not going to commit to the exact week, but -- because we're still putting the finishing touches, but it's almost done.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

And then on the CMC issue, again, my question is how long will it take to format a package or prepare a package to satisfy the requirement on the additional information?

Dino Dina

Well, I've already answered that question, but let me answer it again. It depends entirely on clarifying with FDA exactly to what level of excruciating detail or formality some of those things need to be brought and, in particular, how expensive the data that we need to -- that are requested and we need to submit must be. We believe that we have the bulk of those data. If we have not interpreted correctly their requirement, there may be some additional wants that might take some additional time. It isn't going to be an instantaneous turnaround. We are going to have to do some work to assemble all of this and make sure that it fits their requirements, but let's say that we're talking about months and not years.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Is it 1 month or 9 months?

Dino Dina

Nice try.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Okay. And then, another question is on the post-marketing plan. Has the FDA given you guys any thoughts or feedback on the post-marketing plan and how that fits into a restricted label?

Dino Dina

We do believe that it's a one line thing that we still need to finish that discussion.

Operator

And the next question is from Megan Dow of MLV.

Megan McCloskey - MLV & Co LLC, Research Division

So it sounds like you're going to have a lot of discussions coming up in the next few weeks with the FDA. So I think a more appropriate question for how the company can be moving forward on a positive note is what's going on in Europe. So how are you guys moving forward with either partnership discussions or marketing discussions, particularly in Germany and the European markets at this time?

Dino Dina

So as you can imagine, over the past couple of months, that's really not where our focus has been, in that we've been trying to really expedite and try to bring to a positive closure the FDA process and unfortunately, it hasn't gone quite as we might have hoped. The critical part in Europe, at this point, is really to get approved. And there, we are working and are providing EMA with answers to the day 120 questions that they post and that we expect to continue to prosecute that application in fall so that we can get to an approval in early 2014, I think that -- as soon as we have a better clarity of the path in the U.S. And in parallel with that, we can continue discussions with respect to European commercialization. But those have been fundamentally on hold for the past several months.

Operator

There are no further questions at this time. I'd like to turn the call back over to management for closing remarks.

Dino Dina

Well, thank you very much for participating in the call. This was clearly a bit short of our expectations. I believe that there is a path forward. It's going to take a little bit of patience for us to get to the point we can provide everybody with the desired clarity, and that's something that both we, and our investors, need in order to assess what we need to do to bring this to approval. We'll continue to, of course, work with the FDA and continue to work in Europe as we've just said, and bring the product to the approval it deserves. And we'll be here all day to take your calls, and then on the ground, in Boston, next week for in-person meetings. So hopefully, we can continue to make progress, both in communicating where we are and where we're going. Thank you.

Operator

Ladies and gentlemen, this concludes today's program. You may now disconnect. Good day.

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