Dynavax Technologies Corporation (DVAX - Free Report) announced a strategic restructuring in order to prioritize the vaccine business by focusing on its first commercial product Heplisav-B (the only two-dose hepatitis B vaccine [Recombinant], Adjuvanted). As part of the plan, the company will explore alternatives for its immuno-oncology portfolio, lay off workers and streamline operations to focus on the Heplisav-B’s commercialization.
Though the company’s near-term focus will be on Heplisav-B sales execution, it is assessing additional opportunities to leverage the 1018 adjuvant and evaluating other opportunities for growth.
Shares of Dynavax have lost 36.8% year to date against the industry’s growth of 2.5%.
Further, Eddie Gray announced that he will retire from his positions of chief executive officer and director on Aug 1, 2019. The board will conduct a search for the company's next CEO, and consider both internal and external candidates. In order to focus on the vaccine business the company is eliminating approximately 82 current positions, representing approximately 37% of its current U.S. workforce. It is providing severance, continuation of employee benefits and outplacement assistance to the employees affected by the restructuring. The positions eliminated are mainly related to research and clinical development for the immuno-oncology programs, and general and administrative functions.
Restructuring and retirement costs related to compensation and benefit expenses along with severance costs are expected to be approximately $5.5 million, exclusive of stock compensation. The company may incur additional restructuring expenses, including retirement of fixed assets and facility-related costs. The workforce reduction is expected to lower compensation and benefit costs by approximately $16 million annually. After all existing oncology trials and commitments are complete, the company expects its operating expenditures related to external oncology costs to decrease about $8 million per quarter as compared to the first quarter ended Mar 31, 2019.
The move will enable to compamy to explore strategic alternatives for its immuno-oncology programs, and realign resources to focus on commercializing its HEPLISAV-B vaccine, which is gaining market share and is well positioned to become the new standard of care in the United States.
Zacks Rank and Stocks to Consider
Dynavax currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the biotech sector are Anika Therapeutics Inc. (ANIK - Free Report) , Applied Genetics Technologies Corp. (AGTC - Free Report) and Axovant Sciences Ltd. (AXGT - Free Report) . All of them carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Anika’s earnings per share estimates have moved up from $1.22 to $1.28 for 2019 and from $1.21 to $1.33 for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters, with average beat of 72.00%.
Applied Genetics’ loss per share estimates have narrowed from $1.25 to 1 cent for 2019 and from $2.39 to $2.15 for 2020 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with average beat of 83.47%.
Axovant’s loss per share estimates have narrowed from $9.76 to $9.42 for 2019 and from $7.97 to $7.00 for 2020 over the past 60 days.
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