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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: Shares of biotechnology company Dynavax Technologies (Nasdaq: DVAX ) were obliterated today, losing as much as 52% of their value, following an unfavorable Food and Drug Administration panel safety view of its experimental hepatitis-B vaccine, Hepislav.
So what: Following the market close yesterday, Dynavax announced the findings of the FDA panel for Hepislav. Consistent with the vaccine's positive results, by a vote of 13-1 the panel recommended approval of Hepislav as it did indeed induce an immunogenic response. However, by a vote of 8-5 (with one abstaining) the FDA panel voted that there wasn't enough clinical trial data to support the idea that the vaccine is safe.
Now what: Although the efficacy of Hepislav isn't in question, it now seems fairly unlikely that the FDA will approve the drug on its PDUFA date of Feb. 24. What's more likely to happen is that the FDA will tell Dynavax to go back to the drawing board and perform a long-term late-stage safety study on Hepislav that could drag an approval out for a year or more. That's bad news for an already unprofitable company that's burning through its remaining cash.
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