Why Dynavax Technologies Corporation Stock Is Rising Today

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What happened

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Shares of Dynavax Technologies Corporation (NASDAQ: DVAX) are up by over 11% in pre-market trading on modest volume this morning, following a report that management is exploring different strategic options for its hepatitis B vaccine, Heplisav-B, including a licensing deal or an outright sale.

So what

After receiving a positive advisory committee vote earlier this year, Heplisav-B is now widely expected to get the green light from the FDA in the next few weeks. If that line holds, the vaccine should be on the market in early 2018.

While that's certainly good news, the problem is that Dynavax lacks the infrastructure necessary to maximize the vaccine's commercial potential. So a licensing deal or a sale of the vaccine to a bigger pharma might be the best route for Dynavax at this stage. The company, after all, could use a cash infusion to apply toward the development of its early to midstage immuno-oncology pipeline. 

Now what

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Dynavax has yet to decide exactly what to do with Heplisav-B. And if a suitor isn't willing to pay a reasonable price for the promising vaccine, the company appears set to proceed with a launch on its own.

However, the most likely outcome is, in fact, a licensing deal. FDA-approved vaccines are highly sought-after products in the pharma space because they tend to provide sustainable levels of revenue for upwards of a decade or even longer. Plus, Heplisav-B has a compelling clinical profile that suggests that it could quickly become the market share leader, generating upwards of $700 million in sales per year at peak. 

The bottom line is that either a licensing deal or a sale would relieve Dynavax from having to divert cash away from its fledgling immuno-oncology pipeline to raise a sales force, and it would also greatly extend the company's cash runway. That's a win-win for shareholders, and why a deal seems imminent.

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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.