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What: Shares of biotechnology company Dynavax Technologies (NASDAQ:DVAX) were eviscerated today, losing as much as 37%, following the receipt of a complete response letter from the FDA regarding its hepatitis B vaccine, Heplisav.

So what: The complete response letter, which is a fancy way of saying "rejection letter," noted that the FDA wouldn't approve Heplisav for the targeted 18-to-70-year-old audience without additional safety testing. Furthermore, the FDA also noted that it was concerned with the occurrence of rare autoimmune events for some patients taking the vaccine and hinted that it may only recommend the drug with restricted use. Finally, the FDA also requested additional information with regard to Dynavax's manufacturing controls and procedures. Dynavax appears hopeful it'll be able to meet with the FDA to address these issues within the next six weeks.

Now what: Investors were given enough warning when Heplisav went before the FDA's panel in November, and, while it received unanimous support from an efficacy standpoint from the 13 voters, eight of the 13 voting members recommended against approval based on inadequate safety data. If that was the extent of Dynavax's problems -- and all it had to do was run an additional safety trial -- then the stock probably wouldn't be hit as hard today. However, the FDA's concern regarding the adjuvants in Heplisav causing rare autoimmune events is a serious concern that could drastically shrink the target audience of the vaccine. I'm extremely skeptical at this point that, even if the vaccine is approved, will it reach enough people to matter? Only time will give us the answer to that mystery.

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