Dynavax(DVAX) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total product revenue for Q3 2020 was $13.3 million, with HEPLISAV-B product revenue increasing to $11.6 million from $10.2 million in Q3 2019, primarily due to a return of adult hepatitis B vaccine utilization to approximately 75% of pre-COVID levels [26][27] - Loss from operations decreased to $13.8 million from $30.6 million in the same quarter last year, while net income for Q3 was $4.4 million, mainly due to a gain of $21.2 million in the fair value of warranty liability [35] - Cash, cash equivalents, and marketable securities totaled $177.2 million as of September 30, 2020 [35] Business Line Data and Key Metrics Changes - HEPLISAV-B achieved its highest quarterly revenue since launch with net product revenue of $11.6 million, driven by significant demand from the Department of Defense and a major national retailer stocking the product [13][26] - CpG 1018 generated $1.7 million in product revenue for Q3 2020, marking the initiation of revenue from this second product [29] Market Data and Key Metrics Changes - The total adult hepatitis B market experienced a 25% reduction in utilization compared to the same period last year due to COVID-19, with the Department of Defense segment increasing by 16% [12] - Integrated delivery networks, hospital systems, and clinics saw a decrease in utilization of approximately 35% from the same period last year [12] Company Strategy and Development Direction - The company is focused on advancing HEPLISAV-B and leveraging CpG 1018 for collaborations in COVID-19 vaccine development, positioning itself for both short-term and long-term growth [6][7] - The strategy includes establishing a portfolio of collaborations to demonstrate CpG 1018's capability to enhance immune responses across various vaccine antigens [17][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of HEPLISAV-B and the potential for CpG 1018, with expectations of generating approximately $130 million to $230 million in revenue from a supply agreement with Valneva in 2021 [38] - The ongoing pandemic has highlighted the importance of vaccines, and the company aims to capitalize on this awareness to drive sales and market share growth [41] Other Important Information - The company amended its loan agreement to include sales of CpG 1018 for determining annual net sales requirements, recognizing the potential revenue opportunity from this product [30] - Cost of sales for Q3 increased to $4 million, reflecting higher unit costs for HEPLISAV-B and costs associated with producing CpG 1018 [31] Q&A Session Summary Question: What is the company's strategy regarding vaccine development? - The company aims to develop and commercialize novel vaccines, focusing on solutions for individuals with weakened immune responses, such as the elderly and those with chronic conditions [40] Question: What is the expected market opportunity for HEPLISAV-B? - The company believes HEPLISAV-B will become the standard of care for adult hepatitis B vaccination in the U.S., with a potential future market opportunity exceeding $600 million in net sales [41]