radar alert DVAX 0.63 long post
I smell a huge buyout offer by Glaxo...According to me, the real reason for the recent agreement of 17 dicember 2009, between Glaxo (GSK) and Dynavax(DVAX), worth up to 800 millions, with a first immediate upfront payment of 10 millions $, isn't also "to discover, develop and commercialize novel inhibitors of endosomal toll-like receptors for the treatment of immuno-inflammatory diseases (four programs targeting autoimmune and inflammatory diseases such as lupus, psoriasis, and rheumatoid arthritis)" as press release reports...
GSK signed this industrial, expensive and strategic choice perhaps to establish a durature and solid relationship in order to exploit the real core business of both companies, the Hepatitis Vaccine Program.
Why to pay up to 800 millions $ sharing profits,when it's easier to takeover the entire company, spending 100 millions $, or 2.5$ per share? I think because DVAX doesn't want to get bought for a ridicolous amount in comparison to huge future profits(infact management "protects" company's indipendence with a poisonpill plan, in order to dilute an hypotetic unsolicited raider).
DVAX is developing the competitor of ENGERIX B, Hepatitis B lead drug of Glaxo.
DVAX' heplisav (2 applications, healthy adults and patients with end-stage renal disease) is the big bet, a phase 3 potential drug in clinical hold from 2008, but only in Us; maybe in Europe drug can be approved faster.
Dvax will submit now the additional clinical and safety data requested by FDA for final risk assessment. Dynavax believes the information requested by the FDA is available.
DVAX is searching new partnership for final heplisav development, after termination of agreement with Merck. Dvax owns now all right in Heplisav, after Merck departure,will Glaxo let this opportunity to other competitors?
Glaxo, a cash-cow monstre, may offer up to 5$ for DVAX, to take over directly instead to fund its research's program.
5$ for Dvax is nothing for GSK, because the offer could be worth only 200 millions $, but DVAX is also plenty of cash, between 50 and 60 millions, with 6 drug clinical and preclinical pipeline.
Adding Heplisav to its various and profitable products hepatitis vaccine offer could return entire GSK investment in DVAX in some years.
Rumors are that Engerix B is less efficacious and rapid than Heplisav, as shown by phase 2 and 3.
Glaxo's fear that Heplisav could be approved, in Us or europe, or in both, may damage Engerix b sales, worth several hundreds of millions.
Comparing respective phase 1 and 2,Heplisav seems to be better than Engerix B, Glaxo Hepatitis B lead drug.
Now Dvax is worth only 25 millions $, vs net cash position of 50 millions $ sure at the end of 2009, no debt,potentially new milestones and fund committments,that can improve their cash position and a rich clinical and preclinical pipeline, parnership with Novartis, Astra Zeneca and NIH.
If DVAX drugs failed, what will the worst scenario?
At the end of 2009 Dvax still mantains a huge reserve cash of
50 millions $ (excluding milestones or committments,but some money surely will be gained), BVF will still remain as 1st activist shareholders,
DVAX will be liquidated or forced to sale, the same
destiny happening to AVGN or NTII and other biotech players...
If not in 2009, this scenario could be in 2010, cash burn at DVAX is 10/12 millions,
not more: 40 millions $ is still 1$ per share.
I don't want be too optimist but it seems to me that the presence of BVF is an insurance for other shareholders.
DVAX I think that something of important is cooking: according to me, but only in opinion repeat, DVAX will sell its 100% rights for Heplisav to GSK very soon. GSK or also other co. may pay for these rights 20/50 millions plus royalties, LJPC f.e. sold its rights for phase 3 lupus treatment drug Riquent to BMRN for 30 millions (upfront total payments and up to 290 millions of royalties) even if this failed...When FDA will disclose its positive opinion (I suggest FDA will replace the clinical hold, according to me, one only desease in a trial vs 95% positive results isn't a valid reason to block a drug much better than its competitors...) DVAX will sell its rights to fund the last steps of phase 3.
Can everyone imagine what will happen to DVAX pps if and when this event will be? I don't think that with 90/100 millions cash position and future royalties you will be able to get this stock for less than 5$...
here's an article that confirms my thoughts...
Biotech M&A for Bargain Hunters - 5602 views
By Stockpickr Staff
Updated at 4:17 p.m. on March 9, 2009, from 10:57 a.m.
While investors around the world are fearful of a potential global depression, strategic value-additive acquisitions are bountiful across a wide array of sectors and businesses. Large-capitalized companies are finally using their stockpiles of cash and the recent decline in the world markets to bolster their business lines, picking up companies that they think are cheaply valued.
Strategic mergers are flying all over this depressed market, and the biotechnology space is no exception.
On Monday, the Wall Street Journal reported that Genentech’s (DNA) board of directors is close to striking a $95-per-share sale to Roche, and Dow Chemical (DOW) and Rohm & Hass (ROH) have agreed to a takeover agreement in which Rohm & Hass shareholders will receive $78 per share.
On Monday morning, Merck (MRK) offered to acquire Schering-Plough (SGP) for $41.1 billion, and CF Industries (CF) rejected Agrium’s (AGU) offer to acquire the company. Pfizer's (PFE) purchase of Wyeth (WYE) has also been getting a lot of attention.
This is one of the most active sectors for mergers and acquisitions right now, and one of the best places for making money in these uncertain markets.
Another company shopping for value these days is GlaxoSmithKline (GSK), which has about $9 billion in cash and an additional $35 billion in yearly gross profit.
GlaxoSmithKline made some very intriguing deals and acquisitions last year, expanding its products and pipeline in the biotechnology space. It picked up Sirtris Pharmaceuticals for $720 million early last year, and it's in the process of buying Genelabs Technologies for $57 million.
In late November, GlaxoSmithKline bought Genelabs for $1.30 per share, which at the time represented a 150% premium to Genelabs' closing price. GlaxoSmithKline's was willing to pay such a hefty premium in part because of its newfound interest in the hepatitis market. Gaining access to Genelabs gave GlaxoSmithKline two developing hepatitis C treatments.
Another name GlaxoSmithKline might be interested in acquiring is Dynavax (DVAX).
On Dec. 17, 2008, GlaxoSmithKline signed an agreement with Dynavax in which Dynavax received $10 million, with the potential for $800 million in payments from GlaxoSmithKline under a deal to develop autoimmune and inflammatory disease treatments.
The agreement gives GlaxoSmithKline an exclusive option on four Dynavax programs focused on diseases including lupus, psoriasis and rheumatoid arthritis. Along with the agreement, Dynavax will conduct research and early clinical development, at which point GlaxoSmithKline can exercise its exclusive option and license each program going forward.
When the deal was announced, shares of Dynavax surged higher, going from 26 cents on Dec. 16 to a high of $1.74 on Dec. 17h on almost 50 times its normal trading volume, suggesting investor appetite and approval for the deal going forward.
However, as the global economy and capital markets went into basic free fall starting in late December, investors seem to have forgotten about Dynavax, its agreement with GlaxoSmithKline and the stock's potential.
In Monday morning trading, Dynavax was at 51 cents per share. It has a current market capitalization of $21.1 million, $64.3 million in cash sitting in the bank and no debt on its balance sheet, which equates to roughly $1.62 in cash per share.
In total, Dynavax currently has partnerships with leading pharmaceutical companies such as GlaxoSmithKline, AstraZeneca AB and Novartis Vaccines and Diagnostics, as well as funding from Symphony Dynamo and the National Institutes of Health
Currently, Dynavax has six drugs in its pipeline:
1. Heplisav, its key hepatitis drug, which showed positive results in phase III testing.
2. HCV, a hepatitis C drug in phase I testing.
3. HBV, a hepatitis B drug in phase I testing.
4. A flu vaccine, in preclinical testing
5. An asthma drug in preclinical testing
6. An autoimmunity/inflammation drug in preclinical testing.
Half of Dynavax’s drugs are focused on the hepatitis market, which reinforces GlaxoSmithKline’s efforts to improve the company’s product offering to the that market going forward. Additionally, GlaxoSmithKline also owns HepatitisBHelp.com which is one of the largest hepatitis-based Web sites in the world.
On March 18, 2008, Dynavax dropped more than 50% after the FDA put a clinical hold on a late-stage trial for its hepatitis B vaccine Heplisav. Dynavax and partner Merck (MRK) said that one patient in a 2,500-person study outside of the U.S. was diagnosed with an uncommon disease causing blood vessel inflammation.
The study did indeed meet its final endpoint goals, showing that Dynavax’s Heplisav had a 95.1% positive result, compared with 81.1% from Engerix-B, a leading hepatitis drug in the space.
It is important to point out here that the FDA halted the trial because of one patient out of 2,500 and that Dynavax more than adequately met its endpoint goals. Dynavax, which believes it already has the additional information the FDA is requesting, will likely file the data shortly, with an FDA review sometime in 2009.
BVF, a well-known biotech hedge fund, owns 21.7% of Dynavax shares. This is both a short-term and long-term positive for Dynavax’s chances as a public company dealing with the FDA or even in a possible merger with GlaxoSmithKline.
BVF believes Dynavax is undervalued. Why else would it own almost 22% of a single company?
There are several ways to win with Dynavax, making it an attractive investment going forward.
1. On a net-cash basis, Dynavax is trading at about 280% below its net cash in the bank. Even if the company were to liquidate and return the capital back to the shareholders, you are looking at north of $1.50 per share in cash. Let’s not even factor Dynavax’s proprietary drugs.
2. Dynavax has six drugs in its pipeline.
3. BVF could turn to shareholder activism to increase shareholder value if it sees fit.
4. Dynavax has a current partnership with GlaxoSmithKline in which Dynavax may receive up to $800 million.
For more information on Dynavax, GlaxoSmithKline and other companies, visit the GlaxoSmithKline Strategic Mergers on portfolio on Stockpickr.
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By:HowdyItsMe
Date: 03/09/09
(cont) Dynavax says that 70% of the market for this type of drug may be ex-U.S. and they do not have clinical hold except in U.S., so who knows...
By:HowdyItsMe
Date: 03/09/09
I tried typing something in here, and you have it set to refresh too quickly, its a pain. I also tried sending an email and it refreshed the comment box too quickly and that was a pain. arggggg. anyway, i'll be short and quick, Merck ended their partnership in Dec due to the Oct Hold. The Fda made a comment that it was too risky to test the drug they had been working on, on healthy subjects but would consider approving it for people with kidney failure.
So the question is are they currently discussing with the fda how to get it approved in this limmited market, I would need to do some more reading, but apparently you are leaving out some information that would be helpful to making an investment decision, it took 10 minutes for me to discover that the Phase III Hep drug may be toast.
