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Why Dynavax Shares Surged

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 biopharmaceutical company Dynavax Technologies (NASDAQ: DVAX  ) climbed 10% today after the company's quarterly results topped Wall Street expectations.

So what: The stock has been crushed recently on ongoing delays surrounding its hepatitis-B vaccine, Heplisav, but today's second-quarter beat -- EPS loss of $0.09 on revenue of $3.4 million versus the consensus loss of $0.10 and $2.91 -- is fueling a bit of optimism over a near-term turnaround. Of course, given the still-very low visibility on the time and costs associated with the Heplisav issues, Fools shouldn't get too excited over the quarter.

Now what: Expect Dynavax shares to remain pressured in the short term. As Foolish biotech expert Sean Williams wrote last month:

I suspect it could be another 18 months before Heplisav again sees the light of day. By then, Dynavax will have burned through what I suspect will be all of its remaining cash, forcing it to turn to a potentially dilutive secondary offering.

When you add the fact that Dynavax doesn't have any other approved products to lean on, those risks just don't seem worth taking on.  

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Related Tickers

9/23/2016 4:00 PM
DVAX $11.41 Down -0.21 -1.81%
Dynavax Technologi… CAPS Rating: ***