Why Dynavax Shares Are in Freefall

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Dynavax Technologies Corp. (NASDAQ: DVAX) shares  crumbled Monday morning after the company said that it received a Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA). Specifically the CRL is in regards to its Biologics License Application (BLA) for its hepatitis B vaccine, Heplisav-B.

For some background: the FDA issues CRLs to communicate that it has completed a review cycle of an application and to request additional information for review and approval.

Dynavax expects a Class 2 designation for a resubmission of the BLA, which would result in a target review period of six months.

The CRL seeks information regarding several topics, including clarification regarding specific adverse events of special interest (AESIs), a numerical imbalance in a small number of cardiac events in a single study (HBV-23), new analyses of the integrated safety data base across different time periods and post-marketing commitments.

In the CRL, the FDA acknowledged that it has not yet completed its review of responses received from Dynavax in early October, including those pertaining to AESIs and the numerical imbalance in cardiac events. The responses included an extensive analysis that included independent expert consultation supporting our view that the imbalance was driven by an unexpectedly low number of events in the comparator arm. It would appear the agency could not fully assess the responses in the current review period. In the CRL, there is no request for additional clinical trials and there are no apparent concerns with rare serious autoimmune events.

Eddie Gray, CEO of Dynavax, commented:

The CRL is consistent with our opinion that HEPLISAV-B is approvable and we are seeking to meet with the FDA as soon as possible. However, the time and resources that will be required to gain approval leads us to consider that we may not be able to advance this program on our own and we are moving swiftly to identify a potential pharmaceutical or financial partner. We will maintain our efforts on the oncology programs, including our lead cancer immunotherapy candidate, SD-101, for which we recently announced encouraging early clinical data in metastatic melanoma.

Before Monday’s move, Dynavax already had underperformed the broad markets, with the stock down about 2% year to date.

Shares of Dynavax were last seen down 61% at $4.45, with a consensus analyst price target of $31.00 and a 52-week trading range of $3.20 to $29.86.