What happened

Shares of Dynavax Technologies Corporation (DVAX -1.63%), a biopharmaceutical company, jumped in premarket trading on Oct. 22 only to tumble during a rough month for the biotech industry overall. According to data from S&P Global Market Intelligence, the stock slipped 20.2% during October.  

So what 

Dynavax investors looking forward to progress with the company's novel toll-like receptor agonist, SD-101, seemed to get what they wanted during a short-lived rally that coincided with several analyst upgrades. Unfortunately, mixed data from a combination study with SD-101 and Keytruda from Merck & Co. (MRK 1.22%) left investors with more questions than answers.

Frustrated trader looking at screens and scratching his head.

Image source: Getty Images.

Dynavax touted an impressive 70% response rate among advanced melanoma patients who received 2 mg or less of SD-101 in combination with Keytruda, a PD-1 inhibitor. Unfortunately, results from the 8 mg group left investors with an uneasy feeling they couldn't shake until the company released its third-quarter report. The stock slid in October as investors couldn't get over a lower 48% overall response rate within the group receiving the study's largest dose of SD-101.

The lack of a dose-dependent response could be a hint that Keytruda is doing all the work. Given the rash of failures among novel new PD-1 combinations, and the shocking success of Keytruda plus old-fashioned chemotherapy, at least some concern is warranted.

Now what

Luckily, a solid third-quarter earnings report delivered earlier this month has already convinced the market to replace nearly all of October's losses. Dynavax's first drug launch hasn't gone nearly as well as hoped but could see a lift in the quarters ahead.

Dynavax's next-generation hepatitis vaccine, Heplisav-B was once considered a potential blockbuster but during the drug's third full quarter since earning approval from the Food and Drug Administration, sales reached just $1.5 million. Although the company's recently hired salesforce took a while to find its feet, during the third-quarter earnings call investors cheered the news that September was a record month, and during October Heplisav-B sales outperformed the entire third quarter.

The company finished the quarter ended Sept. 30 with $180 million in cash after burning through $118.9 million during the first nine months of the year. Heplisav-B sales appear on the right track, but it will take more than a few record quarters before operations even approach the break-even point.