What happened
Shares of Dynavax Technologies Corporation (DVAX +0.00%) gained as much as 19% in pre-market trading this morning on the news that the Food and Drug Administration's vaccines and related biological products advisory committee (VRBPAC) will review the company's experimental hepatitis B vaccine, Heplisav-B, on July 28, 2017. Even though this advisory committee meeting will be held less than two weeks ahead of Heplisav's scheduled Prescription Drug User Fee Act (PDUFA) target action date of Aug. 10, 2017, Dynavax said the FDA isn't currently planning on changing this date.
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Despite this surge in pre-market trading, Dynavax's shares opened up only 6% higher, and have steadily cooled off as the market digests this regulatory update.
So what
An advisory committee meeting tends to be held when the FDA has outstanding questions about an experimental medical product after a formal internal review has been conducted. In this case, the FDA appears dubious about Heplisav's risk-to-reward profile, which is probably going to be the central theme of the advisory committee.
The big picture issue is that GlaxoSmithKline's (GSK +0.30%) Engerix-B and Merck's (MRK +0.33%) Recombivax HB are already on the market for this indication, meaning that there's no overwhelmingly pressing need to approve yet another hepatitis B vaccine.
Now what
The one issue working in Heplisav's favor is that there is a documented need for vaccines that target specific subpopulations like diabetics. Review studies, after all, have shown that Engerix-B and Recombivax HB tend to produce fairly weak levels of seroprotection in diabetics compared to non-diabetics. However, the FDA doesn't seem to think this gap in care is sufficient to green-light Heplisav without rigorously vetting its potential side effects.
The bottom line is that an advisory committee is somewhat of a neutral event in Heplisav's case. The FDA's reluctance to approve this vaccine because of rare side effects like Wegener's Granulomatosis isn't exactly a new issue, so an external review was probably always in the cards. At least this time around, investors will get to hear the FDA's side of the story -- instead of having to rely on Dynavax's broad strokes version following a Complete Response Letter.
