Dynavax Technologies Corp. (NASDAQ: DVAX) was a small cap stock even before today’s news, but a complete response letter from U.S. Food and Drug Administration (FDA) has taken more than $120 million in shareholder value on Monday. The FDA is requesting that its hepatitis B vaccine named Heplisav needs a further safety evaluation before it can be approved in adults.
When investors see news of a complete response letter, it almost always means that an approval process has been delayed at best. It can be an outright denial or it can result in further testing and evaluation. That can often take years and millions upon millions of dollars that many small biotechs do not have on hand.
Note that back on November 15, 2012, the FDA’s Vaccines and Related Biological Products Advisory Committee voted eight to five, with one abstention, that there was insufficient data to adequately support the safety of Heplisav. Dynavax also said that the committee voted 13 to one that Heplisav data adequately demonstrated immunogenicity. Here is what the company said regarding this complete response letter:
The FDA specified that the indication in adults 18-70 years of age cannot be approved without further evaluation of safety in this broad age group. The FDA also continues to express concern that novel adjuvants may cause rare autoimmune events. However, the Agency indicated its willingness to continue discussions regarding a more restricted use of HEPLISAV. Dynavax plans to discuss the CRL with the FDA to identify the most expeditious path to approval for HEPLISAV, particularly in adults who may receive the greatest benefit from HEPLISAV.
Furthermore, the FDA requested additional data from Dynavax’s process validation program and clarifying information on the manufacturing controls and facilities related to the assurance of the quality of the commercial product. Dynavax believes it can provide the information but the exact timeframe for its response cannot be determined until it has met with the Agency.
Dynavax said that it plans to meet with the FDA to discuss the steps necessary for potential approval of Heplisav and currently believes the meeting can take place within six weeks. Following its meeting with the FDA, Dynavax will provide updates as appropriate. The company’s marketing application continues to be under review in Europe.
Shares are down almost 35% at $1.954, after closing at $2.97 on Friday, and the 52-week range before today was $2.22 to $5.34. The new market cap is about $345 million after the loss.
The only good news is that Dynavax had almost $150 million in cash and short-term investments as of its last balance sheet. If you look at the Dynavax drug pipeline, Heplisav is the furthest along after Phase III trials and its other two drug study programs are in early stages.