2024-01-02 13:53:27 ET
Summary
- Today, we take another look at Dynavax Technologies Corporation, which experienced a boost in revenue from the Covid pandemic, but this has now nearly completely diminished.
- However, the company's core asset is the HEPLISAV-B, a vaccine for Hepatitis B, which has gained market share and achieved high compliance rates.
- Third quarter results showed strong performance for HEPLISAV-B, leading to an increase in sales guidance for 2023. Analysts also expect a rebound in earnings and sales in 2024.
- What's ahead for Dynavax Technologies in 2024 is highlighted in the paragraphs below.
Facts are threatening to those invested in fraud. ”? DaShanne Stokes.
Today, we put Dynavax Technologies Corporation ( DVAX ) i n the spotlight as 2024 commences. This is a name that has been a rock-solid covered call holding within my portfolio for several years. The company got a burst a revenue from the Covid pandemic, which has now all but completely dissipated. However, this bounty helped the company bolster its cash reserves, establish itself as the standard of care in the hepatitis B vaccine market, and transition to consistently profitable company. An analysis for what is ahead in the new year follows below.
Company Overview:
Dynavax Technologies is based just outside of San Francisco. The majority of the company's revenues over the majority of 2021 and 2022 were due to an adjuvant they have developed called CpG 1018. The product became a core part of several COVID-19 vaccine products outside of the United States. As the pandemic has now become endemic, that revenue source is all but defunct at the moment.
However, Dynavax's core long-term asset and franchise is HEPLISAV-B. This is a vaccine for Hepatitis B. This vaccine has rapidly market share since approved late in 2017, as it is more effective (95% versus 81%) from the previous standard of care Entergis-B. This vaccine also can administer via two doses over a month rather and three doses over six months, thus achieving a much higher level of compliance. Of note, HEPLISAV-B was developed off Dynavax's toll-like receptor [TLR] immune modulation platform. The stock currently trades at $14.00 a share and sports an approximate market capitalization of $1.8 billion.
Third Quarter Results:
Dynavax Technologies posted its Q3 results on November 2nd. The company delivered GAAP earnings per share of 11 cents, the consensus was for a one penny a share loss. Revenues did fall nearly 59% on year-over-year basis to $69.5 million, but that was $8 million above expectations.
HEPLISAV-B accounted for $62.3 million of overall revenues and rose 66% from the same period a year ago. Impressively, HEPLISAV-B garnered 41% of the U.S. hepatitis B vaccine market in the third quarter, up from 32% at the end of 3Q2022. Due to the strong quarter, leadership raised FY2023 HEPLISAV-B net product sales guidance to $210 million to $220 million from $200 million to $215 million previously.
The company also has also potential vaccine candidates in early development. One effort involves combining its CpG 1018 within a more effective plague vaccine. Funded in part by the Department of Defense, Phase 2 results for this effort should be out this year. Similar efforts are also being develop for potentially more effective vaccines for Shingles and TDAP as well.
Analyst Commentary & Balance Sheet:
TD Cowen ($25 price target), H.C. Wainwright ($28 price target) and JMP Securities ($27 price target) all reiterated Buy ratings on the stock immediately following the release of third quarter results.
Approximately 12% of the outstanding float in the shares is currently held short. Several insiders sold shares in the second half of 2023. Collectively, they sold approximately $25 million worth of shares. However, the majority was one just over $21.5 million disposal made in early August. The company ended the third quarter with some $720 million in cash and marketable securities on its balance sheet .
Verdict:
Thanks to its large Covid vaccine adjuvant sales, the company made $1.97 a share in FY2022 on sales of $722 million. Now that those revenues have been lost, the analyst firm consensus sees a loss of 11 cents a share on sales of just $235 million in FY2023. They project earnings and sales will rebound in FY2024 where they have penciled in 31 cents a share of earnings on sales growth of 23%. It should be noted that Dynavax has guided it will generate positive free cash flow for the 2023 fiscal year.
Management continues to believe that the U.S. market opportunity for HEPLISAV-B will be over $800 million annually. The company should be consistently profitable and seeing earnings grow significantly started in FY2024. Add in the huge cash balance and DVAX continues to have a favorable risk/reward profile, and one I plan to continue to mainly hold using covered call positions given the options against the equity are both lucrative and liquid.
Truth waits to be found. It searches for no one .”? Suzy Kasse.
For further details see:
Dynavax Technologies: Still A Solid Pick For 2024