I love it when a press release says one thing and the stock price says another -- as if investors are really going to be fooled. Yesterday, Dynavax Technologies (Nasdaq: DVAX) used its press-release headline to tout the superior efficacy and safety of its hepatitis B vaccine Heplisav versus GlaxoSmithKline's (NYSE: GSK) Engerix-B, but Dynavax's shares fell 19%.
The culprit? While Heplisav continues to invoke a better immune response than Engerix-B with one less shot, the main reason for running the trial was to show that there wasn't an excessive amount of variation between manufacturing lots. In this case, the primary endpoint was consistency in the amount of antibody produced at eight weeks, which Heplisav failed to meet.
But it's a little more complicated than that -- this is biotech, after all. The lot-to-lot variation was consistent enough at 12, 18, 24, and 28 weeks. On the surface, consistency at four time points would seem to balance out an outlier in one time point, but because the primary endpoint failed, the trial wasn't a success.
Management seems to think the FDA might accept the failed experiment as good enough, citing Pfizer's (NYSE: PFE) Prevnar 13, which was approved despite missing the prespecified consistency criteria for three of the 13 different strains that the antibody protects against. Of course, three out of 13 is different than one out of one.
Management also implied that the FDA might accept a less stringent definition of consistency than the one Dynavax prespecified. Using the level used by Novartis's (NYSE: NVS) Menveo, Heplisav would have passed its consistency endpoint.
Retrospective analysis of data is highly frowned upon by the FDA, because if you look at the data in enough different ways, you're bound to find something that will support your cause.
Dynavax will know soon enough how disapproving the FDA is about its approach. The company has already submitted the data to the agency to see whether it's good enough.
Anything could happen -- as I said, this is biotech -- but investors should plan on seeing a call for another study and then rejoice if it turns out to be unnecessary.
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