FDA Advisory Committee Sends Dynavax Stock Soaring

Shares of Dynavax Technologies (NASDAQ:DVAX) jumped over 70 percent on Monday (July 31) during after-hours trading thanks to a favorable review from the US Food and Drug Administration advisory committee for their hepatitis B vaccine.
In an announcement released on Friday (July 28), Eddie Gray, CEO of Dynavax said the company was encouraged by this vote for Heplisav. “The two-dose regimen offers the potential to increase patient compliance, which physicians and advocates agree is essential to preventing more cases of hepatitis B and achieving the public health goal of eradication,” Gray said.
Decisions from the FDA advisory committees often provide confidence in whether or not the agency will approve candidates it’s reviewing. The agency doesn’t always follow the suggestions from the committee.

If the candidate obtains the full approval of the agency, Dynavax will seek a recommendation from the advisory committee on immunization practices (ACIP) at the CDC in October. The company is planning to launch Heplisav in the US market by early 2018–either on their own or with a potential commercial partner.
According to the Centers for Disease Control and Prevention (CDC) Hepatitis B currently affects approximately 850,000 people in the US.
In a note to investors, Cowen analysts Phil Nadeau and Joseph Thome wrote the company is “significantly undervalued for Heplisav.”
“Though we expect approval to be delayed beyond its Aug 10 PDUFA (The Prescription Drug User Fee Act), it is clear that Heplisav will soon be on the U.S. market,” the analysts wrote.

Treatment had high expectations from analysts

A report from MarketWatch indicates the company’s candidate was slapped with high expectations from analysts since it was projected to produce sales of up to $450 million in the US only.
CNBC also reported that J.P. Morgan analyst Anupam Rama said in a note that Heplisav will most likely get approved by August 10. “[The] panel vote is a major win for Dynavax,” Rama wrote.
“The news also comes as a possible tipping point for the company after years of uncertainty. The FDA declined to approve the vaccine twice,” MarketWatch wrote, those negative reviews were due to unresolved safety concerns with Heplisav.
Based on the new information Nadeau and Thome significantly reduced their previously held estimates for the sales of Heplisav between 2017 up until 2021.
“We think the panel discussion highlighted the major need for a superior and more convenient HBV vaccine, and therefore we still expect that over time Heplisav will become the standard-of-care HBV vaccine,” the analysts wrote.

Investor Takeaway

The FDA review process offers many ups and down for companies in the life science sector, doubt or further extending an investigation can cause stocks to take steps back. Despite the rocky road Dynavax has seen with Heplisav, they are now closer to an approval and are enjoying growth in their stock.
Case in point, William Blair analyst Katherine Xu reiterated her “Buy” recommendation on DVAX on Monday and boosted the target price from $17 to $30 for the company.
Dynavax’s stock price has seen major growth since the start of 2017. Year-to-date the company’s stock has boosted 282.28 percent in its attempts to restabalize following a dwindling end to 2016 and a rocky start in 2017.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.