Biotech Implosion: Dynavax (DVAX)

By Douglas A. McIntyre Updated Apr 27, 5:43PM EDT · Published Oct 22, 9:24AM EDT

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Down_arrow_red_2 Dynavax Technologies Corp. (NASDAQ: DVAX) is the latest biotech implosion as shares are down some 75% today. The company gave an update on an FDA clinical hold on its investigational vaccine HEPLISAV with partner Merck & Co. (NYSE: MRK).

The companies have received communication from the FDA regarding theirresponse to the agency’s request for safety information pertaining tothe clinical hold on the two Investigational New Drug Applications forHEPLISAV. Obviously, it isn’t good.

The FDA advised that the balance of risk versus potential benefit nolonger favors continued clinical evaluation of HEPLISAV in healthyadults and children, which might as well be the kiss of death for atrial program. The FDA did advise that there may be potential for anacceptable risk versus benefit profile for HEPLISAV in patients withrenal failure. For that effort, the FDA has requested additionalinformation from the companies before considering furtherclinical studies in those patients.

Dynavax and Merck are going to evaluate the FDA’s response inconsidering the next steps, but the clinical hold on the two U.S. INDApplications for HEPLISAV remains in effect.

The reason this is so bad is that Merck has been reviewing all of itsclinical trial relationships to focus on those which will have thegreatest upside and the greatest chance for broad acceptance. Even ifthis would be able to be a profitable product for Dynavax, the fear isthat Merck may determine it isn’t worth its efforts.

At the last quarterly report, Dynavax had almost $64 million in cash andequivalents and its total assets were $96.9 million after adding in $5million for goodwill and intangibles. Its total liabilities werelisted as $83.1 million. It has also been burning about $15 million inR&D per quarter on average for the last year.

The new market cap here only $11.3 million after a 75% price drop downto $0.28. Before today its 52-week trading range was $0.97 to $6.55.Traders are obviously coming to the conclusion that there will be closeto nothing left at this company.

Jon C. Ogg
October 22, 2008

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.