Shares of the clinical-stage biotech Dynavax Technologies Corporation (NASDAQ:DVAX) bolted higher this morning on elevated volume as a result of the company's 2017 American Society of Clinical Oncology (ASCO) presentation over the weekend. Specifically, Dynavax announced the initial results from the dose escalation part of its combined phase 1/2 metastatic melanoma trial investigating its intratumoral TLR9 agonist SD-101, in combination with Merck's (NYSE:MRK)checkpoint inhibitor Keytruda.
Impressively, the combo reportedly produced a 100% overall response rate in seven anti-PD-1/L1-naive patients and a complete response rate of 29%. As of 11:26 a.m. EDT, Dynavax's shares were up 15.2% on the back of this news.
The key takeaway is that SD-101 appears to boost Keytruda's efficacy in metastatic melanoma patients without a concomitant increase in unwanted side effects. That's a great result for Dynavax, as it may eventually lead to a lucrative commercialization deal with Merck later on down the road.
While skin cancer is a multibillion-dollar drug market that's unfortunately still growing, investors should probably temper their expectations for SD-101 as a near-term value driver. This experimental immunotherapy, after all, remains at least a year or so away from producing data that might force Merck into a commercialization deal that contains up-front milestone payments.
In the interim, Dynavax is nearing a pivotal advisory committee meeting for its experimental hepatitis B vaccine, Heplisav-B, on July 28, 2017. To be honest, this upcoming regulatory catalyst is likely to play a much larger role in the company's near-term valuation than SD-101's early-stage results. So, before buying shares, investors should feel comfortable with Heplisav-B's chances heading into its advisory committee meeting next month.