Dynavax Technologies Corporation Fourth-Quarter Financials a Non-Event; Pivotal Heplisav Study Initiation Imminent

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Dynavax ended the fourth quarter with $189.4 million in cash, which, according to our model, should sustain operations into 2016. Net loss for the quarter, which included a one-time noncash-deemed dividend of $8.5 million related to preferred stock, was $21.5 million with a per share loss of $0.09, compared with our estimates of net loss of $16.4 million and a per share loss of $0.07.

We continue to expect full enrollment of the study by year-end 2014, top-line data release by year-end 2015, and potential regulatory approvals of Heplisav by the FDA and EMA in second half 2016.

The randomized, observer-blind Phase III study (Study HBV-23) will enroll 8,000 adults between the ages of 18 and 70 in the United States; 5,500 of these subjects are to be vaccinated with Heplisav (two doses at zero and one month) and 2,500 subjects with Engerix-B (three doses at zero, one, and six months). Subjects will be assessed for one year following the second dose. The primary objective of the study is twofold: 1) determining the overall safety profile of Heplisav and 2) demonstrating non-inferiority in the peak seroprotection rate (SPR) induced by Heplisav compared with Engerix-B in subjects with type 2 diabetes. The study will be conducted entirely in the United States, and it is stratified by age and diabetes status.

The HBV- 23 study will bring the total number of subjects vaccinated with Heplisav to 9,000, which should satisfy both the FDA’s and the EMA’s concerns regarding the size of the Heplisav safety database. We note that in November 2012, the Vaccines and Related Biological Products Advisory Committee suggested that a safety database of 8,000 to 10,000 might be sufficient to address its concern regarding the size of the database.

We expect to hear about strategies on the pipeline programs in the coming months, and we expect value creation from the pipeline over the next three years before Heplisav gains market entry. In the following section we provide updates on two partnered programs: asthma with AstraZeneca (AZN $66.64) and lupus with GlaxoSmithKline (GSK $55.84).

The program will be transferred to AstraZeneca following completion of the Phase I study, and Dynavax is eligible to receive up to $100 million in milestone payments and royalties.

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