Good News for Dynavax

Yesterday, Dynavax Technologies Corp. (DVAX - Snapshot Report) announced that the U.S. Food and Drug Administration (FDA) has removed the clinical hold on its late-stage hepatitis B vaccine (HBV) Heplisav which is being developed for patients suffering from chronic kidney disease.

As a reminder, Heplisav was on clinical hold in the U.S since Mar 17, 2008 following the report of the severe adverse event (SAE) of Wegener's granulomatosis. The SAE was reported in the phase III study in healthy adults conducted outside the U.S. Wegener's granulomatosis is an uncommon disease which results in the inflammation of blood vessels .The vaccine is being studied for both healthy adults and patients with end-stage renal disease.

Consequent to the regulatory issues, the partnership with Merck & Co. Inc. (MRK) for Heplisav ended on December 19, 2008. All rights relating to the development and commercialization of Heplisav reverted to Dynavax.

In October 2008 and February 2009, the FDA requested for additional information prior to considering further development of Heplisav in end-stage renal disease patients (ESRD).

Subsequently, Dynavax presented additional phase III data on Heplisav in April. The data demonstrated the vaccine's potential to provide more rapid and increased protection with fewer doses against HBV than GlaxoSmithKline plc’s (GSK) Engerix-B. Furthermore, the company proposed the continued development of Heplisav in populations less responsive to Engerix-B. The population included adults over 40 years of age, individuals with chronic kidney disease, and other groups such as individuals infected with HIV or diagnosed with chronic liver disease. The FDA agreed to the proposal.

As a result of the removal of the clinical hold, Dynavax intends to start a phase III trial for Heplisav in chronic kidney disease patients soon. Furthermore, it intends to start another late stage trial of the vaccine next year in people over 40 years of age. Management expects the vaccine to hit the market by the end of 2012 or early 2013.

Hepatitis B is a chronic disease which can lead to cirrhosis of the liver and hepatocellular carcinoma. The global market for adult hepatitis B vaccines is estimated at over $500 million annually.

The ESRD market is large and growing rapidly. In the United States , approximately 500,000 patients suffer from the disease. The ESRD market is similar in Europe .

The removal of clinical hold on the late stage vaccine sent the Dynavax shares on an upward journey hitting the highest value since March 2008. Yesterday, Dynavax closed at $2.55 an increase of 46% over Tuesday’s closing price.