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Dynavax Technologies: Great Risk/Reward

|Includes: Dynavax Technologies Corporation (DVAX)

Summary

Hepislav-B Vaccine: PDUFA date August 10th, 2017

Peak domestic sales estimates of $650 mm

DVAX share price could multiply several-fold if approved

Mkt Cap

$536.5 M

Est. EPS

-1.47

Avg./Implied 1 Day Move

5.36%/55.35%

Revenue growth YoY

172.67%

FCF 2016

-114.8 M

Total Debt 2016

0

Operating Expenses

~116.3 M (80.8 M in R&D, rest in gen/admin expense)

*Catalyst: Good probability of approval of DVAX’s Hepislav-B in August 2017 (PDUFA date is Aug. 10), FDA committee meeting is this month, July 28.

Hepislav-B’s Background: Hepatitis B Vaccine that beat the competition GlaxoSmithKline’s Engerix-B in a late-stage clinical trial. The vaccine showed a 95.4% rate of peak seroprotection vs 81.3% for Glaxo’s Engerix-B. The focus for Dynavax was on diabetic patients where the study showed an even better seroprotection rate of 90% vs Egerix-B’s 65.1%. Study also showed the two vaccines have very similar safety profiles. Most adverse events were autoimmune related but not related to vaccinations. HEPISLAV previously had 2 CRLs from the FDA (last one in Nov 2016 **summarized below**). Sell-side analysts expect peak domestic sales estimates of $650 mm and more potential in Europe post-approval. Shares could multiply several-fold upon approval and a commercial partnership could bring the firm 45% royalties on all drug sales. Launch would probably occur in 2018 because of unfreezing of manufacturing.

  • November, 2016-- Received CRL from FDA regarding BLA for HEPLISAV-B
    • CRL requested clarification regarding specific adverse events of special interest (AESIs) and a numerical imbalance in a small number of cardiac events in the HBV-23 study
    • However, agency stated it had not yet completed review of company’s response received in October (which included the AESIs and the numerical imbalance in cardiac events). DVAX states response included extensive analysis that finds the numerical imbalance was due to an unexpectedly low number of events in the comparator arm.
    • No additional clinical trials ordered and no more concern for rare autoimmune events
    • Dynavax Receives Complete Response Letter from U.S. Food and Drug Administration for Biologics License Application for HEPLISAV-B – CRL letter summary 
  • February, 2013- Received CRL from FDA regarding BLA for HEPLISAV-B
  • Downside limited long-term as other drugs (SD-101 immuno-oncology) are also in pipeline
    • SD-1-1 is in ongoing Phase 1b/2 study for metastatic melanoma patients
    • Co. believes in triple therapies
    • In 7 anti-PD-1/L1-naiive patients, SD-101 in combination with Merck’s Keytruda resulted in 100% overall response rate and a complete response rate of 29%. This improvement to use of Keytruda alone, which has 33% ORR, with a 6% CR.
    • In 12 patients with advanced melanoma who previously failed anti-PD-1 treatment, SD-1-1 resulted in a 42% tumor shrinkage
  • In January, company announced it would focus on immune-oncology segment and cut costs
    • Cutting 38% of jobs
    • Will result in 40% reduction in cash burn

 

Institutional Holders:

Point 72 – Just upped to 5.2% stake in 13G filing  

Renaissance Tech – 1%

Paulson & Co – 1%

Disclosure: I am/we are long DVAX.