Shares of biotech Dynavax Technologies (NASDAQ: DVAX ) plunged 30% this morning after the company provided an update on its experimental hepatitis B vaccine Heplisav. According to its press release, the company met with the Food & Drug Administration, and the regulatory agency has stated that Dynavax simply doesn't have enough data to confirm the safety of the vaccine.
This can't come as a total surprise to investors who have been tracking Dynavax over the last few months. Back in November, the FDA's advisory committee overwhelmingly voted in favor of the vaccine's efficacy. The major problem, however, was the lack of data to support the drug's safety in the broad age range that the company was seeking approval for (ages 18-70). The committee voted 8-5, with one member abstaining, that the company needed more safety data. A Complete Response Letter from the FDA quickly followed in February, and a lack of safety data was again cited as the main reason for the rejection.
In its February press release, however, Dynavax stated that the FDA "indicated its willingness to continue discussions regarding a more restricted use of Heplisav." Investors may have been hoping that the drug could gain approval with a more limited label, but today's news confirms that the FDA needs more data before it can review the drug again.
Dynavax's struggle to get its vaccine through this final regulatory hurdle has weighed heavily on its share price:
While the company has two other drugs in its pipeline, these therapeutics are in the earliest stages of development, and Heplisav is its only late-stage candidate. I still have to fully digest the company's conference call from this morning, but given this difficult situation, I think that Dynavax will have no choice but to run an additional -- and very costly -- study to assess this vaccine's safety.
With more than $105 in cash and short-term investments as of last quarter, the company currently has a relatively strong cash position relative to its burn rate. However, its spending will probably accelerate if it decides to run another trial. At this point, Dynavax's future looks bleak, and investors need to closely monitor the company's burn rate and how management plans on moving forward following this meeting with the FDA.
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