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1 Reason Dynavax Technologies Corporation Stock Soared in 2017

By George Budwell - Jan 8, 2018 at 8:00AM

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Thanks to the FDA approval of its hepatitis B vaccine, Dynavax's shares crushed the broader market in 2017.

What happened

Shares of Dynavax Technologies Corporation (DVAX -3.40%) had a banner year in 2017. Impressively, the biotech's shares rose by a jaw-dropping 373% last year, according to data from S&P Global Market Intelligence.

The impetus behind Dyanvax's quantum leap higher was the FDA approval of its two-dose hepatitis B vaccine, Heplisav-B, in November. Heplisav-B is the first FDA-approved hepatitis B vaccine in 25 years.

A dial indicating high profit levels.

Image source: Getty Images.

So what

As a more convenient and effective option compared with the currently approved hepatitis B vaccines on the market from GlaxoSmithKline and Merck, Heplisav-B is forecast to eventually become the market share leader. As such, it has the potential to generate between $500 million and $600 million in sales.  

Now what

Heplisav-B may not get off to a particularly roaring start, however. The company, after all, lacks the experience and financial resources necessary to compete on even-footing against either Glaxo or Merck. In fact, Wall Street's consensus estimate has Heplisav-B generating a rather meager $53 million in sales this year.

Investors were thus hoping to get word of a lucrative licensing deal -- or perhaps an outright acquisition -- before the vaccine's scheduled launch in the first-quarter of 2018. So far, though, there doesn't seem to be that much interest in Dynavax or its newly approved hepatitis B vaccine from Big Pharma.

A potential deal, therefore, seems to hinge on how well Dynavax handles the vaccine's initial launch. But the odd twist is that if Heplisav-B exceeds expectations, Dynavax may no longer be willing to entertain a licensing deal.    

As there's no way to tell how this pivotal commercial launch will unfold, however, risk-adverse investors may want to take a wait-and-see approach with this early commercial-stage biotech. A slow start, after all, could result in an emotionally charged sell-off that largely ignores Heplisav-B's long-term commercial prospects.  

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Stocks Mentioned

Dynavax Technologies Corporation Stock Quote
Dynavax Technologies Corporation
DVAX
$10.80 (-3.40%) $0.38
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$93.55 (1.58%) $1.46
GlaxoSmithKline plc Stock Quote
GlaxoSmithKline plc
GSK
$1,764.00 (1.87%) $32.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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