Please ensure Javascript is enabled for purposes of website accessibility

Why Dynavax Technologies Stock Sank in September

By George Budwell – Oct 7, 2020 at 10:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors ran out of patience with this COVID-19 stock last month.

What happened

Shares of the small-cap biotech Dynavax Technologies (DVAX -2.30%) lost 22.4% of their value during the month of September, according to data provided by S&P Global Market Intelligence. The odd part is that the biotech's stock nosedived last month in the absence of a company-specific event. Dynavax's stock appears to have fallen victim to nothing more than speculators moving on to greener pastures.

The biotech's shares doubled at one point earlier this year, thanks to the hype surrounding its proprietary toll-like receptor 9 agonist adjuvant CpG 1018. CpG 1018 is the same adjuvant used in the biotech's FDA-approved hepatitis B vaccine, Heplisav-B. Dynavax is currently collaborating with multiple partners to evaluate this commercial-stage adjuvant as part of a COVID-19 vaccine.  

A green and white chalkboard chart showing a positive trend turn negative.

Image source: Getty Images.

So what

Speculators were clearly hoping that Dynavax would land a healthy portion of a large grant for at least one of these experimental COVID-19 vaccines. Because of the ongoing gridlock in Washington, D.C., however, the second and third tier of COVID-19 vaccine developers -- a group that includes Dynavax -- may never receive a sizable grant. This unfortunate reality appears to be the main driving factor behind Dynavax's sinking stock price over the past few weeks. 

Now what

This double-digit decline, though, might represent a compelling entry point for bargain hunters. The big picture is that Dynavax's shares may be grossly undervalued relative to Heplisav-B's long-term commercial potential. Wall Street, in fact, thinks this beaten down biotech stock could rebound to the tune of 251% over the next 12 months due to the vaccine's improving sales. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dynavax Technologies Stock Quote
Dynavax Technologies
$12.34 (-2.30%) $0.29

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.