Dynavax Now Has A De-Risked Asset With Long-Term Potential

Dynavax Technologies Corporation DVAX announced last Friday that a FDA panel voted 12 to 1 that the safety data for Heplisav, a HBV vaccine, support licensure for immunization against hepatitis B infection in adults 18 years of age and older.

The shares of the company were skyrocketing in reaction to the news.

With the positive FDA Adcom a key de-risking event for Heplisav-B, RBC Capital Markets upgraded shares of Dynavax. The firm pointed out that it had thus far remained on the sidelines on the company due to a lack of clarity on the regulatory outcome for Heplisav-B.

The firm now sees ultimate approval as highly probable.

Timing Of Approval Now Moot Point

Analyst Matthew Eckler believes the remaining near-term regulatory debate will now center around the timing of approval, as the PDUFA date of August 10 is less than a week away.

Meanwhile, RBC Capital Markets noted that the FDA panel had raised concerns about the proposed design of the post-marketing pharmacovigilance program, including the potential for selection against high-risk patients. Also, the panel was concerned about the ability of the company to provide definitive answers within a reasonable time frame.

"However, we anticipate that DVAX will successfully collaborate with FDA to design a satisfactory pharmacovigilance plan, and that the agency will ultimately sign off on the HEPLISAV-B NDA," the firm opined (see Eckler's track record here).

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Significant Potential

The firm thinks Dynavax could prove an attractive BD target, given the long revenue tail and the substantial commitment likely needed to get another HBV vaccine through FDA.

Meanwhile, the firm expects a first quarter 2018 Heplisav launch, with 2018 and 2019 estimates for Heplisav at $15 million and $41 million, respectively. The 2019 estimate assumes a label update in 2019, incorporating data from diabetic participants in the latest phase III trial. Peak Heplisav sales are expected at $290 million in 2026, the firm said.

Assuming approval, the firm noted that Dynavax plans to seek an ACIP recommendation at the October meeting.

RBC Capital Markets is of the view that Heplisav would gain majority share of the adult HBV market as well as market expansion through increased compliance and premium pricing.

As such, RBC Capital Markets upgraded shares of Dynavax from Sector Perform to Outperform and lifted its price target from $7 to $26.

At the time of writing, Dynavax shares were soaring 76.70 percent to $16.34.