Dynavax(DVAX) - 2023 Q4 - Annual Report

Financial Performance - HEPLISAV-B product revenue in the U.S. reached $213.3 million for the year ended December 31, 2023, representing a 69% increase compared to 2022[32] - HEPLISAV-B vaccine net product revenue reached $213.3 million in 2023, representing a 69% growth compared to 2022[8] - The company generated $100.6 million in cash from operating activities in 2023, ending the year with $742.3 million in cash and cash equivalents, and marketable securities[8] - The net loss reported for 2023 was $6.4 million[8] - The cumulative translation adjustment reported as of December 31, 2023, was a $3.0 million loss, compared to a $4.0 million loss as of December 31, 2022, primarily related to foreign exchange rate fluctuations[415] - If interest rates were to rise or fall by 100 basis points, the pro forma change in fair value of investments would be $7.0 million as of December 31, 2023, compared to $4.1 million as of December 31, 2022[413] Market Share and Growth Opportunities - HEPLISAV-B's estimated total market share in the U.S. increased to approximately 42% from 35% at the end of 2022[32] - Estimated market share of HEPLISAV-B in the retail pharmacy segment rose to approximately 58%, up from 42% at the end of 2022[32] - The CDC's recommendation for hepatitis B vaccination in adults aged 19-59 is expected to expand the total annual market opportunity to approximately $800 million in the U.S. by 2027[32] - The company aims to increase HEPLISAV-B market share and leverage it as a foundational asset for growth and pipeline development[38] - HEPLISAV-B competes with three-dose hepatitis B vaccines and aims to capture a majority of the U.S. market share[76] Clinical Trials and Product Development - A supplemental Biologic License Application for HEPLISAV-B vaccination of adults on hemodialysis is under priority review by the FDA, with an action date planned for May 13, 2024[32] - The shingles vaccine candidate Z-1018 is set to initiate a Phase 1/2 trial in the first half of 2024 following IND clearance[30] - The Tdap vaccine candidate Tdap-1018 plans to submit an IND for a Phase 2 human challenge study in the second half of 2024[31] - The plague vaccine candidate is currently in a Phase 2 clinical trial, with top line data anticipated in 2024[33] - HEPLISAV-B demonstrated a 95% protection rate in clinical trials, compared to 81% for the competitor Engerix-B[42] - A Phase 1 clinical trial for a shingles vaccine candidate utilizing CpG 1018 adjuvant was completed, showing promising immunogenicity results[51] - The Tdap vaccine candidate adjuvanted with CpG 1018 is anticipated to improve protection durability against whooping cough[54] Regulatory and Compliance - The company is subject to ongoing FDA regulations, including recordkeeping and reporting requirements, which can lead to legal actions if not complied with[84] - The FDA review process for biopharmaceuticals typically takes ten months, or eight months for unmet medical needs, with potential for extensions[83] - The company must comply with EU GMP standards for manufacturing and distribution of medicinal products, with potential sanctions for non-compliance[104] - Conditional marketing authorizations may be granted for products lacking complete safety and efficacy data, valid for one year and renewable annually[102] - The holder of a marketing authorization in the EU must maintain a pharmacovigilance system and report serious adverse reactions[110] - The company may face civil, criminal, or administrative penalties for non-compliance with FDA and EU regulations, impacting its ability to operate[86][105] Supply Chain and Manufacturing - The company relies on a limited number of suppliers for manufacturing, which poses risks to meeting future demand for HEPLISAV-B[18] - The company has a contract with the U.S. Department of Defense for a plague vaccine development, totaling $33.7 million through 2025[61] - The company has fully satisfied its delivery obligations under supply agreements for COVID-19 vaccines as of December 31, 2023[63] - The company continues to explore other programs for the utilization of CpG 1018 adjuvant to enhance immune responses[63] Employee and Organizational Development - The company has 408 employees as of December 31, 2023, with 275 in the U.S. and 133 in Düsseldorf, Germany[145] - The regrettable turnover rate for 2023 was 7% in the U.S. and 5% in Düsseldorf, with average employee tenure of 3.0 years in the U.S. and 6.2 years in Düsseldorf[146] - In 2023, 32 leaders and key contributors completed a leadership development program, an increase from 30 participants in the prior year[149] - The company launched an internal DEI survey to gather information on its Diversity, Equity, and Inclusion initiatives[150] - The company provides a competitive mix of compensation, including base salary, annual cash bonuses, and equity compensation, with equity compensation increasing based on responsibility level[147] - The average cash bonus payout is based on corporate goals and individual performance, with the CEO's bonus solely based on corporate performance[148] - The company has a remote-first working environment in the U.S., which aids in recruiting and retention efforts[146] Legal and Ethical Compliance - The company is subject to various federal and state "sunshine" laws requiring transparency in pricing and marketing practices, which may impose compliance burdens[128] - The company faces potential penalties for non-compliance with federal and state laws, which could adversely affect operations and financial results[130] - The federal Anti-Kickback Statute prohibits remuneration intended to induce referrals for healthcare services, affecting pharmaceutical marketing practices[119] Market Environment and Pricing - Sales of marketed products, particularly HEPLISAV-B, depend on coverage and reimbursement decisions made by third-party payors[131] - The U.S. government and third-party payors are increasingly implementing cost-containment measures, which may limit product sales[132] - The company is affected by healthcare reforms and scrutiny of drug pricing, leading to lower average net selling prices[133] - The Inflation Reduction Act of 2022 includes provisions for negotiating drug prices under Medicare, impacting future pricing strategies[134] - The Health Technology Assessment process in the EU will influence pricing and reimbursement for medicinal products starting in 2025[138] Intellectual Property - The intellectual property portfolio includes over 25 issued U.S. patents and over 65 granted foreign patents, with over 115 pending patent applications related to TLR agonists or antagonists[66] - The patent estate is projected to expire between 2024 and 2043, with specific patents related to HEPLISAV-B expiring in 2032[67]