DVAX : Dynavax Technologies Stock Analysis and Research Report
2017-10-16 - by Asif, Contributing Analyst
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Dynavax Technologies is a clinical-stage immunotherapy company focused on leveraging the power of the body’s innate and adaptive immune responses through toll-like receptor (“TLR”) stimulation. Dynavax current product candidates are being investigated for use in multiple cancer indications, as a vaccine for the prevention of hepatitis B and as a disease modifying therapy for asthma.
Its lead cancer immunotherapy candidate is SD-101, a C Class CpG TLR9 agonist that was selected for characteristics optimal for treatment of cancer, including high interferon induction. Directly injecting SD-101 into a tumor site optimizes its effect by ensuring proximity to tumor-specific antigens. In animal models, SD-101 demonstrated significant anti-tumor effects at both the injected site and at distant sites. Dynavax is conducting a clinical program intended to assess potential efficacy of SD-101 in a range of tumors and in combination with a range of treatments, including checkpoint inhibitors and other therapies. In June 2017, Dynavax presented updated data at the American Society of Clinical Oncology Annual Meeting in patients with metastatic melanoma from the dose-escalation phase of an ongoing Phase 1/2 study of SD-101 in combination with Keytruda® (pembrolizumab), an anti-PD-1 therapy developed by Merck, known as MSD outside the United States and Canada. Results in patients naïve to anti-PD-1 or anti-PDL-1 treatment showed an overall response rate of 100 percent (seven of seven evaluable patients) and a complete response rate of 29 percent. The combination of the two drugs was generally well tolerated with no dose-limiting toxicities.
Dynavax is developing DV281, a novel investigational TLR9 agonist designed specifically for focused delivery to primary lung tumors and lung metastases. Inhaled DV281 is planned to enter clinical trials for non-small cell lung cancer, in combination with anti-PD-1 therapy, in the second half of 2017. HEPLISAV-B is its investigational adult hepatitis B vaccine. Dynavax resubmitted its application to market HEPLISAV-B to the FDA in February 2017 and on July 28, 2017 the FDA’s Vaccines and Related Biological Products Advisory Committee (“VRBPAC”) voted 12 to 1 (with 3 abstentions) that the safety data for HEPLISAV-B support licensure for immunization against hepatitis B infection in adults 18 years of age and older. A prior VRBPAC panel voted 13 to 1 that the immunogenicity data for HEPLISAV-B support approval and thus the July 2017 VRBPAC was only asked to vote on safety. The FDA is not bound by VRBPAC’s recommendations regarding safety and efficacy, but takes its advice into consideration when reviewing marketing applications.
The July 2017 VRBPAC provided commentary on the design of its proposed post-marketing safety study for HEPLISAV-B that will require further discussion and agreement with the FDA prior to approval. HEPLISAV-B has a Prescription Drug User Fee Act (“PDUFA”) date of August 10, 2017. However, in discussions with the FDA following the VRBPAC meeting, the company and the Agency agreed that due to the feedback by the VRBPAC regarding the post-marketing safety study and the proximity to the PDUFA date, more time is required to finalize key details of the study prior to approval. As such, the FDA has sent it a request for additional information regarding the post-marketing study. As discussed with the FDA, its response to the Information Request will trigger a major amendment to the HEPLISAV-B Biologics License Application (“BLA”). This will extend the PDUFA date, expected to be November 10, 2017, to provide the Agency and it up to three months to agree on the design of the post-marketing study prior to approval. If approved on or about this date, the company currently plan to launch HEPLISAV-B in the United States in early 2018.
In January 2017, Dynavax implemented organizational restructuring and cost reduction plans to align around its immuno-oncology business while allowing it to advance HEPLISAV-B through the FDA review and approval process. Dynavax expect HEPLISAV-B costs prior to an FDA decision to be approximately $1.4 million per month and all other operating costs to support continued development of its oncology business for the remaining two quarters of 2017 to be approximately $30 to $32 million. To achieve these cost reductions, the company suspended manufacturing activities, commercial preparations and other long term investment related to HEPLISAV-B and reduced its global workforce by approximately 40 percent.
AZD1419 is being developed by AstraZeneca AB (“AstraZeneca”) for the treatment of asthma pursuant to a collaboration and license agreement. AstraZeneca initiated a Phase 2a trial in 2016. Dynavax's revenues consist of amounts earned from collaborations, grants and fees from services and licenses. Product revenue will depend on its ability to receive regulatory approvals for, and successfully market, its drug candidates. Dynavax has yet to generate any revenues from product sales and have recorded an accumulated deficit of $857.8 million as of June 30, 2017. These losses have resulted principally from costs incurred in connection with research and development activities, compensation and other related personnel costs and general corporate expenses. Research and development activities include costs of outside contracted services including clinical trial costs, manufacturing and process development costs, research costs and other consulting services. Salaries and other personnel-related costs include non-cash stock-based compensation associated with options and other equity awards granted to employees. General corporate expenses include outside services such as accounting, consulting, business development, commercial, investor relations, insurance services and legal costs. Its operating results may fluctuate substantially from period to period principally as a result of the timing of preclinical activities and other activities related to clinical trials for its drug candidates.
Since its inception, the company has relied primarily on the proceeds from public and private sales of its equity securities, government grants and revenues from collaboration agreements to fund its operations. Dynavax expect to continue to spend substantial funds in connection with the development and manufacturing of its product candidates, particularly SD-101 and DV281, its lead investigational cancer immunotherapeutic product candidates, human clinical trials for its other product candidates and additional applications and advancement of its technology. In order to continue its development activities and if HEPLISAV-B is approved, the company will need additional funding or a partnership to enable continued development work and commercialization of HEPLISAV-B. This may occur through strategic alliance and licensing arrangements and/or future public or private debt and equity financings. If adequate funds are not available in the future, the company may need to delay, reduce the scope of or put on hold one or more development programs while the company seek strategic alternatives.
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