A decision by an independent monitoring board to continue the phase 3 trial of Dynavax Technologies Corp.'s (NASDAQ:DVAX) hepatitis B vaccine led to the company's shares jumping by 10% earlier today.
Dynavax Technologies is a clinical stage biotechnology company that is developing HEPLISAV-B, a vaccination to prevent the spread of hepatitis B that requires fewer doses and potentially better protection than existing hepatitis B vaccines.
Currently, the hepatitis B vaccination market is led by GlaxoSmithKline's Engerix-B and Twinrix, and Merck & Co's Recombivax-HB, all of which require three doses over a six month period and don't work as well in patients with chronic conditions such as diabetes.
Because multiple doses over a longer period can reduce patient adherence rates and it's particularly important to provide vaccination protection to at-risk patient populations, Dynavax Technologies designed HEPLISAV-B so that it can be taken in just two doses over a one month period and so that it works more effectively in patient populations like diabetics.
The final stretch
The independent monitors had already given Dynavax Technologies the OK to continue its phase 3 trial of HEPLISAV-B twice previously, so this third evaluation isn't too surprising.
Regardless, the fact that monitors are giving Dynavax Technologies the green light to continue its late stage trial suggests that there haven't been any new safety concerns that could derail any potential filing for regulatory approval.
That's good news for investors, but we'll still need to wait a bit longer to find out if HEPLISAV-B delivers results that match up favorably to Engerix-B. Dynavax Technologies hopes to complete this trial by October, which means that it should release top-line trial results for investors to digest sometime early next year.
Overall, I'm intrigued by HEPLISAV-B's potential to improve patient treatment, but I'm admittedly concerned about its $27 million in quarterly expenses. Granted, Dynavax Technologies has $98 million in cash at quarter end (plus another $29 million since then thanks to stock sales) and that should keep the lights on until the company is ready for a potential filing of HEPLISAV-B, but I'm still not quite convinced (yet) that HEPLISAV-B's peak sales potential justifies much more of a premium to its current market cap. For that reason, I'm unwilling to chase this stock higher.