Did Market Over-React to FDA News on Dynavax Technologies Corporation (NASDAQ:DVAX)?

Dynavax Technologies Corporation (NASDAQ:DVAX)

Things are looking up for Dynavax Technologies Corporation (NASDAQ:DVAX). Back in November DVAX shares plunged 74% on news that the FDA was requesting a Complete Response Letter (CRL) from the small biotech regarding its Biologics License Application which sought approval for its Hepatitis-B vaccine (Heplisav-B) – there is no cure for Hepatitis B, and disease prevention through more effective vaccines is critical to reducing its spread. The CRL was requesting more information from the company and also included the possibility of additional testing. At the time DVAX management stated that it had submitted a response to the issues in October – before the FDA even issued the CLR.

Today news broke during pre-market trading that the FDA had accepted for review the response by Dynavax Technologies Corporation (NASDAQ:DVAX) to the CLR. This means the company will not have to seek out a larger partner to license their drug or raise additional capital for this endeavor – two possibilities that contributed to the November tanking of the stock. However this development does not confer impending commercialization upon the drug – only that the requested information is accepted for review. The FDA has reportedly assigned a Prescription Drug User Fee Act (PDUFA) action date of Aug. 10, 2017 to Heplisav-B’s regulatory filing.

Dynavax Technologies Corporation (NASDAQ:DVAX) is a clinical-stage immunology company focused on leveraging the power of the body’s innate and adaptive immune responses through toll-like receptor (TLR) stimulation. Dynavax is developing product candidates for use in multiple cancer indications, as a vaccine for the prevention of hepatitis B and as a disease modifying therapy for asthma. Dynavax’s lead product candidates are SD-101, an investigational cancer immunotherapeutic currently in Phase 1/2 studies, and HEPLISAV-B, a Phase 3 investigational adult hepatitis B vaccine.

It would be hard to emphasize the need for Dynavax Technologies Corporation (NASDAQ:DVAX) to get a product to market and generate some sales. Since 2011 they have posted EPS losses of -$3.89, -$4.10, -$3.83, -$3.45, and -$3.25 in 2015. Unfortunately, their sales have been on a downward trend while their outstanding shares have increased each and every year. $21.6 million in 2011 sales dwindled to $4.1 million in sales in 2015. Meanwhile the 12.51 million outstanding DVAX shares grew to $32.88 million in 2015.

3/1/2017
Ticker Symbol SGY
Last Price a/o 2:07 PM EST  $                      7.03
Average Volume                1,150,000
Market Cap (mlns)  $                  173.30
Sales (mlns) $4.40
Shares Outstanding (mlns) 38.51
Share Float (mlns) 38.4
Shortable Yes
Optionable Yes
Inside Ownership 0.10%
Short Float 24.24%
Short Interest Ratio 8.1
Quarterly Return -10.00%
YTD Return 13.92%
Year Return -72.08%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy. 

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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