Death for Dynavax's Lead Drug Candidate


Dynavax Technologies Corp. (NASDAQ: DVAX) is feeling the wrath of the markets after an FDA panel said that there was insufficient data to support its investigational Hepatitis B drug called Hepislav. The Vaccines and Related Biological Products Advisory committee voted against recommendation.

The company has said that it will work with the FDA during the regulatory review and the final decision for approval is due by late in February of 2013. A formal FDA decision is not required to follow the panel recommendations, but generally speaking the formal recommendation does follow the panel recommendation. That seems to be the case even more when a panel recommends a vote against approval.

Dynavax shares closed at $44.63 yesterday and its 52-week range is $2.74 to $5.34. Shares are now down about 48% at $2.41 in active premarket trading. Mark that as a 52-week low. The market cap as of yesterday's close was $827 million. The new implied market cap with shares down 48% would be $430 million and the company's balance sheet as of September 30 had $148.2 million in cash and short-term securities.

Dynavax is not just a one-product investigational company. The problem is that Hepislav was its own product and it was the farthest along in its clinical pipeline. The company has a Autoimmunity/Inflammation candidate in Phase I with GlaxoSmithKline (NYSE: GSK) and Asthma/COPD candidate in pre-clinical studies with AstraZeneca (NYSE: AZN).


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