Before we get started, take a look at this quote pulled from an article we published covering Dynavax Technologies Corporation (NASDAQ:DVAX) back in July 2017:
"We took a look at the science that underpins [Heplisav B] and the data that Dynavax has put forward as being supportive of a regulatory approval and used the information to form a bias as to the outcome of the program… our expectations flew against those of wider markets – we suggest that the drug had a good chance of picking up a regulatory green light and that each time this program gets a knock back, the dip might be a nice opportunity to pick up some discounted shares ahead of what we expect will ultimately be a positive regulatory outcome."
That's a pretty hefty quote but we felt it necessary to include in its entirety so as to get the point across that we have been telling our readers for a long time that, regardless of what wider markets think about Dynavax's and Heplisav's chances in front of the FDA, the drug and its application is strong. DVAX Daily ChartAt the time, the company was trading for around $15 a share. To give credit where it's due, markets have since traded up on Dynavax to around $20 a share as of yesterday's close.Once the markets shut yesterday, however, things got really exciting.After hours on Thursday, Dynavax announced that the FDA has approved Heplisav B in its target indication of hepatitis B vaccination. Anybody that has been with us for a while will know that this has been one of the most drawn-out drug development programs of the last decade (slightly more, in fact) and, while we have outlined our expectations along the way as being ultimately positive, it's easy to understand why many felt that the drug was doomed.This latest approval comes on the back of a 12-year development pathway along which Dynavax has spent close to half a billion dollars of shareholder cash and it comes on the back of the third regulatory submission to the FDA.Back in 2013, the agency rejected a new drug application, requesting fresh data outright. This time last year, the FDA once again rejected an application, citing its wishes to wait for some longer-term safety and efficacy data hitting press at the outcome of a then-ongoing trial.This year, Dynavax resubmitted and the company has finally got some return on its graft.There are already plenty of options on the market in this hepatitis B vaccine indication, the most established and most prominent of which is GlaxoSmithKline plc (ADR) (NYSE:GSK)'s Engerix B. However, Engerix B, and its closest competitors, require three doses spread over a six-month period. The vast majority of people (we are talking upwards of 50%) don't return for the final dose (despite the $165 cost of the full regimen) and this translates to a large portion of those that received the initial doses not developing seroprotection (which is just another word for effective vaccination).In contrast, Heplisav B needs only be administered as part of a two-dose regimen, with both doses being able to be delivered within four weeks of one another. That's a huge USP on the current SOC and it's one that – many believe (and we are among this many) – will allow the company to quickly grab a large portion of market share in the space.Analysts expect conservative peak sales at more than $300 million annually by 2026. Right now, Dynavax's market capitalization sits at a little over $1.2 billion.The company raised $125 million as part of a public offering back in August and it's likely that the vast majority of this cash will go towards a commercialization campaign for Heplisav B in the US. As per the most recent announcement and the management communication surrounding it, the company expects to start selling the drug (and, by proxy, bringing in revenues from it) during the first quarter of 2018.Given the fact that there's at least $125 million cash on hand, any near-term dilution risk is somewhat mitigated. With that said, there is the potential for further dilution if the vaccine doesn't get off to a running start and, in turn, the company needs to bridge finance an expanded commercialization effort ahead of the drug reaching peak sales.Given that this news came after hours, markets haven't really had a chance to respond to it yet. The company is trading 15% higher than its Thursday close on the back of after-hours activity but there is a good chance we will see a strong move as the bell rings on Friday morning in the US.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on DVAX, sign up below!Image courtesy of Jeremy T. Hetzel via FlickrDisclosure: We have no position in DVAX and have not been compensated for this article.
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