Dynavax shares plummet on allergy drug failure

Shares of Dynavax Technologies Corp. plummeted Friday after the drug developer said it is ending development of its ragweed allergy drug Tolamba after it failed a midstage trial.

Shares fell 50 cents, or 20 percent, to $1.99 in morning trading, after earlier touching $1.70.

Dynavax said the drug did not show a significant improvement over placebo in reducing nasal symptoms.

"The current trial displayed an unexpectedly high degree of variability in the data set possibly due to the subjective nature of symptom scoring used to assess efficacy," Chief Development Officer Martin Sanders said. "We have concluded that this problem may be difficult to overcome in future clinical studies."

In a Friday morning conference call, Chief Executive Officer Dino Dina said the company had "run out of ideas" for new trials to conduct that could lead to positive results.

As a result of ending the Tolamba program, Dynavax updated its 2008 outlook. The company now says it expects to have cash on hand of $50 million by the end of the year, compared with $40 million to $44 million previously forecast. The company lowered its pro forma operating expense forecast to between $70 million and $78 million, down from a previous forecast of $80 million to $88 million. Pro forma revenue is still expected to be between $42 million and $46 million.

Dina said the company's top priority is now is restarting the company's hepatitis B vaccine program Heplisav, which the Food and Drug Administration put a hold on in March amid safety concerns. Dynavax is partnered with Merck & Co. to develop the drug.