Why Dynavax Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shareholders of biopharmaceutical company Dynavax (Nasdaq: DVAX  ) are having a no good, very bad day as its stock is down 23% following the announcement of a secondary offering.

So what: Choosing to market its hepatitis B drug Heplisav independently means Dynavax needs cash. Today it took its money-raising efforts to the market in the form of a 17.5 million share offering that priced at $4.25 -- a clean 17% below yesterday's closing price. If that wasn't enough of a beating for shareholders, CEO Dino Dina, who has helmed the ship since 1998, noted that he would be stepping down. The market doesn't like uncertainty, and today we're getting a three-course meal of it.

Now what: Everything is really riding on the success or failure of Heplisav; and as we've learned from Dendreon (Nasdaq: DNDN  ) with its prostate cancer treatment Provenge and Human Genome Sciences' (Nasdaq: HGSI  ) lupus drug Benlysta, launching a drug is just as important as getting it approved by the Food and Drug Administration. Today's cash-raising effort is a necessary evil. Dynavax chose to go it alone and must raise the necessary cash to support its marketing efforts. Personally, I'm less worried about the secondary offering as I am about a longtime CEO leaving. Too many unanswered questions for my liking, if you ask me.

Craving more input? Start by adding Dynavax to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Dendreon. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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