Monday, November 19, 2012

Advisory Vote Affects Dynavax Technologies Corporation (NASDAQ:DVAX) Negatively

Dynavax Technologies Corporation (NASDAQ:DVAX) is in the news for all the wrong reasons – late Thursday, the company experienced a huge decline in shares, which was totally unexpected and there was a lot of hullabaloo surrounding the incident.

An article of Seeking Alpha, published 10 days back, gave briefings regarding three upcoming catalysts for biotech stocks. Dynavax was on the list with the Vaccines and Related Biological Products Advisory Committee vote on Heplislav's BLA for the treatment of Hepatitis B scheduled for November 14-15th.

WILL DVAX Bounce Back? Find Out Here

The votes in favor of the efficacy profile of Heplislav, were thirteen to one, more important vote on the status of the BLA itself was eight to five against approval of the drug, with one glitch. The committee was not too sure because of the insufficiently tested/measured safety profile of Heplislav, which met its primary endpoint in the "Booster" phase III trial just before the BLA submission in April. It is doubtful if Dynavax will receive a green light from the FDA for Heplislav in the treatment of Hepatitis B on its PDUFA action date of February 24th, 2013.

The shares of Dynavax declines around 47% to $2.44 in Friday’s session. The market value at the close yesterday was $827 million and has been predicted to open at approximately $356 million or so. Though the FDA is most likely to veto the drug, Dynavax will surely conduct more studies to ensure maximum safety when the next BLA comes. The company shells out $15 million per quarter, so if the delay takes another 2 years, it is tough to say that Dynavax is now worth almost $500 million less.

If Dynavax fails to prove show that the compound's efficacy is worth the risks and side-effects, then the BLA will never give a go-ahead to Heplislav and the company is worth a fraction of its current valuation, which is making shareholders extremely anxious.

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