Dynavax Technologies Q4 2024 Earnings Report

Dynavax Technologies EPS Results

• Actual EPS: $0.05
• Consensus EPS: $0.05
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Dynavax Technologies Revenue Results

• Actual Revenue: $72.03 million
• Expected Revenue: $72.70 million
• Beat/Miss: Missed by -$673.00 thousand
• YoY Revenue Growth: N/A

Dynavax Technologies Announcement Details

• Quarter: Q4 2024
• Date: 2/20/2025
• Time: After Market Closes
• Conference Call Date: Thursday, February 20, 2025
• Conference Call Time: 4:30PM ET

Dynavax Technologies (NASDAQ:DVAX), a commercial stage biopharmaceutical company, focuses on developing and commercializing vaccines in the United States. It markets HEPLISAV-B, a hepatitis B vaccine for prevention of infection caused by all known subtypes of hepatitis B virus in age 18 years and older in the United States and Europe. The company also manufactures and sells CpG 1018, the adjuvant used in HEPLISAV-B. Dynavax Technologies Corporation has a collaboration agreement with Valneva Scotland Limited; Zhejiang Clover Biopharmaceuticals, Inc.; Clover Biopharmaceuticals (Hong Kong) Co., Limited; Biological E. Limited; PT Bio Farma; Medigen Vaccine Biologics; and Serum Institute of India Pvt. Ltd. The company was formerly known as Double Helix Corporation and changed its name to Dynavax Technologies Corporation in September 1996. The company was incorporated in 1996 and is headquartered in Emeryville, California.

Dynavax Technologies Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to the Dynavax Technologies Fourth Quarter and Full Year twenty twenty four Financial Results Conference Call. As a reminder, this call is being recorded. At the end of the company's prepared remarks, we will open the call for questions and provide specific participation instructions at that time. I would now like to turn the call over to Paul Cox, Vice President, Investor Relations and Corporate Communications. You may begin.

[Paul Cox, VP of Investor Relations & Corporate Communications at Dynavax]

Thank you for participating in today's call. Joining me from Dynavax are Ryan Spencer, Chief Executive Officer Don Cassell, Chief Commercial Officer Rob Jansen, Chief Medical Officer and Kelly McDonald, our Chief Financial Officer. Earlier today, Dynavax released financial results for the fourth quarter and full year ended 12/31/2024. Copies of the press release and a supplementary slide presentation are available on Dynavax's website. Before we begin, I advise you that we will be making forward looking statements today based on our current expectations and beliefs, including but not limited to potential market sizes, market segmentation, effective marketing efforts, future expected market share and related growth rates and related ICIP ACIP recommendation impact on each financial guidance and trends, including revenue and profitability, cash flow and sufficiency of current capitalization timing and results of FDA submissions, clinical trial starts and data readouts and potential future uses of or demand for our CPG1018 adjuvant.

[Paul Cox, VP of Investor Relations & Corporate Communications at Dynavax]

These statements involve risks and uncertainties and our actual results may differ materially. These risks are summarized in today's press release and detailed in the Risk Factors section on our SEC filings, including today's annual report on Form 10 K. Our forward looking statements speak as of today and we undertake no obligation to update such statements. Our earnings press release and this call will include discussion of certain non GAAP information. You can find our earnings press release including relevant non GAAP reconciliations on the Investors section of our corporate website at timeavax.com.

[Paul Cox, VP of Investor Relations & Corporate Communications at Dynavax]

And with that, I will now turn the call over to Ryan.

[Ryan Spencer, CEO at Dynavax]

Thanks, Paul, and thank you all for joining us this afternoon. In 2024, we delivered across our strategic priorities, including achieving record fourth quarter and annual HEPLISAV B product revenue, advancing our pipeline programs, achieving profitability and returning capital to shareholders through our share repurchase plan. This performance sets up for even greater success in 2025, which we expect to be a banner year for Dynavax. For HEPLISAV B, we expect to drive continued top line growth with net product sales between $3.00 $5,000,000 to $325,000,000 fueled by the expanding adult hepatitis B vaccine market in The U. S.

[Ryan Spencer, CEO at Dynavax]

Along with expected market share gains by HEPLISAV B. We also expect 2025 to be a transformational year for our development pipeline with multiple programs advancing to important milestones and new programs emerging throughout the year. Our shingles program is our most advanced clinical program and we see a significant opportunity for a differentiated and best in class shingles vaccine in both The U. S. And Ex U.

[Ryan Spencer, CEO at Dynavax]

S. Markets, which is currently a multi billion dollar annual market dominated by a single product. We know the profile required for a competitive vaccine to be successful and disruptive in this market will require similar efficacy to the standards of care and significantly improved tolerability compared to the existing product. We are executing on a development plan to establish this product profile for our Z10x gene program. As a reminder, we've already completed a dose ranging Phase one study where we saw comparable vaccine response rates to Shingrix, while demonstrating a high CD4 T cell response and meaningfully lower rates of moderate to severe local and systemic post injection reactions.

[Ryan Spencer, CEO at Dynavax]

For our ongoing Phase onetwo study, we expect to report our top line readout in the third quarter, which will be based on one month data following the last vaccine dose in the study. We expect this study to establish proof of concept of this program and to select the dose and regimen taken to our Phase II extension study in patients over 70 years old along with further studies. We expect these data will support our dialogue with regulators and potential strategic partners ahead of a global Phase three launch. We also expect to begin our next clinical trial for our PLATE vaccine program, which is partnered with U. S.

[Ryan Spencer, CEO at Dynavax]

Department of Defense. Rob will speak more about our clinical pipeline in a few minutes. We are proud of the company we are building around our core assets of HEPLISAV B and CBG ten eighteen, which have together helped protect millions of people around the world, while establishing Dynavax as a leading vaccine company. Driven by continued top line revenue growth and operational discipline, our strong financial position has enabled us to also return capital to shareholders as part of our balanced capital allocation strategy. We will also continue to pursue external opportunities to generate sustainable long term value for our shareholders.

[Ryan Spencer, CEO at Dynavax]

This will be an exciting and important year ahead for Dynavax and I look forward to providing you with updates on our progress along the way. I'd like to turn the call over to Don.

[Donn Casale, Chief Commercial Officer at Dynavax]

Thank you, Ryan. At Dynovex, we are proud to be the leader in The U. S. Hepatitis B Adult Vaccine market. Since its launch in 2018, HEPLISAV B has disrupted the market due to what we believe is a differentiated and best in class profile.

[Donn Casale, Chief Commercial Officer at Dynavax]

Through our strong commercial execution, we have increased HEPLISAV B's total market share to 44% by the end of twenty twenty four, securing its position as a market leader. This rapid advancement in a few short years demonstrates our ability to compete effectively against established legacy products. The ACIP universal recommendation has transformed the adult hepatitis B vaccine market, creating one of the largest addressable patient populations for vaccines in The U. S. The market continues to adopt these expanded guidelines with overall hepatitis B vaccine dose growth increasing by nearly 10% year over year in 2024.

[Donn Casale, Chief Commercial Officer at Dynavax]

HEPLISAV B's strong performance in this expanding market has resulted in record net revenues of $71,000,000 for the fourth quarter and $268,000,000 for the full year 2024. These results reflect significant growth compared to prior year. The growth of HEPLISAV B is supported by two key segments, retail pharmacy and integrated delivery networks or IDNs. We continue to prioritize our sales and marketing efforts in these critical areas. Although market share was essentially flat year over year in these segments, together they drove an impressive 25% annual growth in HEPLISAV B doses.

[Donn Casale, Chief Commercial Officer at Dynavax]

We are encouraged by the ongoing adoption of HEPLISAV B and look forward to continuing our momentum in 2025 and beyond.

[Donn Casale, Chief Commercial Officer at Dynavax]

As we look to

[Donn Casale, Chief Commercial Officer at Dynavax]

the future, we are excited by market developments that are improving access to and increasing the focus on hepatitis B vaccination in The U. S. These developments are reflected in our 2025 guidance and further strengthen our outlook on the long term market opportunity and market share for HEPLISAV B. First, starting in January of

[Donn Casale, Chief Commercial Officer at Dynavax]

this

[Donn Casale, Chief Commercial Officer at Dynavax]

year, Medicare patients gained access to hepatitis B vaccines at retail pharmacies through roster billings under Medicare Part B, which mirrors the approach for influenza and pneumococcal vaccines. Until now, Twinrix was the only hepatitis B containing vaccine reimbursed for Medicare patients in the retail setting, giving it majority market share among that population. Now with equal access and leveraging our commercial strength of retail, we are excited about how this new Medicare policy could support HEPLISAV B's retail growth and market share in 2025. Second, beginning in 2025, adult hepatitis B vaccination will be included in the Healthcare Effectiveness Data and Information Set or HEDIS measure. HEDIS is the largest and most widely used set of quality performance indicators in U.

[Donn Casale, Chief Commercial Officer at Dynavax]

S. Healthcare and IDNs typically align their operations to perform well on these measures. The inclusion of hepatitis B vaccination as a HEDIS measure signals its growing priority placing alongside other high volume adult vaccines. We believe this change is likely to enhance focus and utilization in IDNs and large clinics, while also increasing market share as the measure focuses on series completion, which we believe aligns well with HEPLISAV B's two dose regimen. These positive market dynamics combined with our strong commercial execution and performance in retail and IDNs segments give us confidence in the long term revenue opportunity for HEPLISAV B.

[Donn Casale, Chief Commercial Officer at Dynavax]

We are encouraged by the growth of the HEPLISAV B market opportunity, which expanded by approximately 90,000,000 to $650,000,000 in 2024. This progress tracks with our long term outlook for HEPLISAV B market opportunity in The U. S, which we expect to peak to over $900,000,000 by 02/1930 with HEPLISAV B capturing at least 60% market share. This long term guidance reflects our expectation of double digit annual growth in product net sales through 02/1930. We expect the HEPLISAV B market opportunity to remain durable beyond 02/1930, driven by ongoing vaccination of the eligible adult population, observed revaccination practices by healthcare providers and continued market share gains.

[Donn Casale, Chief Commercial Officer at Dynavax]

In summary, we remain confident in the outlook for HEPLISAV B. We expect HEPLISAV B to further solidify its position as a clear market leader in the expanding hepatitis B vaccine market. We are incredibly proud of our commercial team's success and excited about the momentum we're building today and into the future. I will now turn the call over to Rob to take you through our clinical pipeline.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

Thank you, Don. I'll begin with our shingles vaccine program Z1018. As Ryan mentioned, we previously reported results from our Phase one clinical trial designed to evaluate our investigational shingles vaccine Z1018 compared to Shingrix in 150 participants. We studied different regimens of Z1018, including a low and high dose of CPG1018 adjuvant, and we selected the high dose of CPG1018 adjuvant to take into future studies. One month following the second vaccine dose, antibody and CD4 positive T cell vaccine response rates were similar in the high CpG1018 adjuvant dose groups to Shingrix.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

In the high dose C1018 groups, the antibody vaccine rate was ninety six percent to one hundred percent compared with one hundred percent for Shingrix. CD4 positive T cell vaccine response rates were eighty eight percent to ninety two percent in the Z1018 groups compared to ninety six percent in the Shingrix group. The quality of CD4 positive T cells was also similar between the Z1018 and Shingrix groups. The proportion of subjects with GE specific activated CD4 positive T cells that express three or four activation markers was seventy nine percent to eighty two percent in the Z1018 groups and eighty two percent in the Shingrix group. Z1018 showed favorable tolerability compared to Shingrix without observed safety concerns.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

The rate of solicited moderate and severe local post injection reactions was eight percent for Z1018 and thirty seven percent for Shingrix. While moderate and severe systemic post injection reactions were twenty six percent for Z1018 and forty three percent for Shingrix. The ongoing Phase onetwo trial is designed to select the antigen dose and regimen to take into future studies and we're evaluating four forty one adults aged 50 to 69 years. Immunogenicity and safety results at one month after the second dose are expected in the third quarter. With the understanding that there's no accepted correlative protection for shingles vaccines, CD4 positive T cells are thought to be an important, but not only factor in preventing reactivation of the varicella zoster virus.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

In this descriptive study, we seek to demonstrate a CD4 positive T cell frequency that is similar to Shingrix. Demonstrating a similar distribution and quality of T cell responses, durable T cell responses and similar antibody responses will also be important. If observed, this constellation of findings would suggest to us a high probability of demonstrating comparable efficacy in a Phase three trial. Following the one month data, we expect to select a dose regimen to advance into a Phase two extension study evaluating adults 70 years of age and older, while we await the six month follow-up data from the 50 to 69 year old groups. Regarding the PLUG vaccine program, Dynavax and the Department of Defense recently executed a new agreement for approximately $30,000,000 through the first half of twenty twenty seven to support additional clinical and manufacturing activities.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

We plan to initiate a Phase two clinical trial in the third quarter of twenty twenty five. Given that the program is focused on preventing the spread of pneumonic plague in a biological attack, our goal in the Phase two study is to maximize a rapid antibody response through dose ranging of the CPG1018 adjuvant and optimizing the dosing regimen. Now turning to our program to develop a four dose HEPLISAV B vaccine regimen for adults on hemodialysis. We previously reported that the FDA issued a complete response letter for our SBLA that's on file. We continue to work with FDA to incorporate data from an observational retrospective cohort study in the SBLA filing with a goal of resubmitting this year.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

We look forward to providing future updates on this program. I'll now turn the call over to Kelly to review our financial results.

[Kelly MacDonald, CFO at Dynavax]

Thank you, Rob. Before I get started, a reminder to please refer to our press release and Form 10 K filed earlier today for more detailed financial information. Financial highlights for the fourth quarter and full year include HEPLISAV B net sales of $71,000,000 for the fourth quarter, up 39% year over year and a record $268,000,000 for the full year, up 26% year over year reflecting the impressive growth in the total addressable market opportunity. Additionally, HEPLISAV B gross margin was 82% for the full year 2024, an increase compared to 76% in 2023 and achieving our guidance of approximately 80% for 2024. And looking forward, we expect HEPLISAV B gross margin to continue at around 80% in 2025.

[Kelly MacDonald, CFO at Dynavax]

Turning to expenses. R and D expenses were $19,000,000 in the fourth quarter, up 32% year over year and $62,000,000 for the full year 2024, up 12% year over year. Looking forward for R and D expenses, as we continue to progress our clinical stage pipeline through key milestones in 2025, we expect R and D expenses to increase by high teens percent compared to 2024. SG and A expenses were $42,000,000 for the fourth quarter, which is flat year over year and they were $170,000,000 for the full year 2024, up 11% year over year. Looking forward for SG and A expenses, we expect these expenses to be roughly flat in 2025 as we believe this represents the appropriate resourcing to drive the overall growth of our current business and maximize the HEPLISAV B opportunity.

[Kelly MacDonald, CFO at Dynavax]

Moving to the bottom line, we achieved our previously stated guidance for full year profitability with net income of $27,000,000 including net income in the fourth quarter of $7,000,000 Lastly, on the P and L, we are introducing a non GAAP measure of adjusted EBITDA excluding non cash stock based compensation that we intend to report on for 2025. Non GAAP adjusted EBITDA excluding stock based compensation was $13,000,000 for the fourth quarter, an increase of over 200% year over year and $52,000,000 for the full year 2024, up over 300% compared to prior year. Please see our press release issued earlier today for a reconciliation of GAAP to non GAAP results and accompanying disclosure. Transitioning to the balance sheet, we exited the year with cash equivalents and marketable securities of $714,000,000 compared to $742,000,000 at the end of twenty twenty three. The decrease in our cash position includes the deployment of $100,000,000 towards our first accelerated share repurchase program, which was finalized earlier this month.

[Kelly MacDonald, CFO at Dynavax]

As a reminder, in November 2024, we announced the authorization of up to $200,000,000 in share buybacks, which approximated just under 15% of our market cap and approximately 37% of our net cash at the time of announcement. We expect to complete the remaining $100,000,000 of authorized share repurchases by the end of twenty twenty five. We are encouraged by our robust performance in the fourth quarter and full year. We achieved all of our financial guidance goals including HEPLISAV V net sales and full year profitability further strengthening our financial position and enabling us to drive long term growth while returning capital to shareholders as part of our balanced capital allocation strategy. Turning to our financial guidance for full year 2025, we expect HEPLISAV B net product revenue to be in the range of $3.00 $5,000,000 to $325,000,000 which represents 17% year over year growth at the midpoint.

[Kelly MacDonald, CFO at Dynavax]

We also expect adjusted EBITDA excluding stock based compensation to be at least $75,000,000 demonstrating our ability to grow adjusted EBITDA at more than two times the rate of product revenue, further strengthening our ability to deliver on our strategic priorities in 2025. In closing, we're excited to report another strong year, consisting of record revenue for HEPLISAV B, improved product gross margin and advancing pipeline with key milestones this year and a strong financial profile with balanced with a balanced capital allocation strategy. We're very proud of this progress and we're also excited about our growth prospects as outlined on the call today. Thank you, everyone. Operator, we would now like to open the Q and A portion of today's call.

[Operator]

Our first question or comment comes from the line of Matt Phipps from William Blair. Mr. Phipps, your line is now open. Hi,

[Matt Phipps, Group Head - Biotechnology at William Blair]

Dave. Sorry, I hope you can hear me. Thanks for taking my question. Curious as you go into 2025 and just kind of looking at the year over year growth in market share. I know you guys have given 02/1930 guidance, but what is the kind of entrance to get into more accounts and continue to drive market share growth?

[Matt Phipps, Group Head - Biotechnology at William Blair]

So what do you think is the barriers that you need to overcome? Is it just that you've gotten the fast adopters and now you have to try to find these kind of other accounts? Or is there something else to help kind of drive continued market share gains between now and 02/1930?

[Ryan Spencer, CEO at Dynavax]

Hey, Matt. Thanks for the question. Don, why don't you take that one? The one thing I want to highlight is we recognize that our market is broken up to two key segments between IDN and retail. So probably a little bit of comments on both would be helpful.

[Donn Casale, Chief Commercial Officer at Dynavax]

Yes. Hey, Matt, how are you doing? So a great question. When we think about market share, I alluded to it on the call. There's two major market events that are going to help support continued growth market share.

[Donn Casale, Chief Commercial Officer at Dynavax]

Access in the Medicare patient population and retail is critical to be able to continue the gains in retail that is incredibly important. And also having the HEDIS measure, which again is going to focus on series completion, which obviously is going to favor HEPLISAV and its two dose completion. So those are two events that will continue to support market share gains. And then it's a continuation of continuing to working with customers in various outlets to drive the market share. So we're very confident and continue to grow the share in both those critical segments.

[Donn Casale, Chief Commercial Officer at Dynavax]

And again, those are the two segments that will have disproportionate growth in the marketplace as we maintain high share and gross share. We'll obviously pick up the overall total market share in line with what we are guiding to by 02/1930.

[Matt Phipps, Group Head - Biotechnology at William Blair]

Thanks Don. And on the shingles program, maybe you mentioned this a little bit, but just

[Matt Phipps, Group Head - Biotechnology at William Blair]

kind of going over again what you think is the non inferiority level that you need to show?

[Matt Phipps, Group Head - Biotechnology at William Blair]

I think you've said

[Matt Phipps, Group Head - Biotechnology at William Blair]

it before like 75% or greater of Shingrix. And is that on just CD4 response rate or again looking at that kind of three or four positive activation signal T cells?

[Ryan Spencer, CEO at Dynavax]

Yes. So I'll let Rob handle the details here, Matt. But I think that what's important to note is the trials that we're running now or dose signing trials, we've selected an adjuvant dose or CPG-twenty eighteen dose in the current trial is designed to test the adjuvant with and without alum as well as varying doses of the antigen. And so I just want to make sure it's clear that the trial is not powered or designed for statistical analysis of these various immunogenicity markers. And as you noted in Rob's prior comments, generically, there's a number of markers and the constellation of data that we're going to have to evaluate, not a simple objective measure of CD4 T cell frequencies alone.

[Ryan Spencer, CEO at Dynavax]

Rob, you maybe can comment on prior some of the prior information we've given around the level of expectation for CD4s.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

Yes. The 75 really is about 75% of the median, quantity, CD for T cell quantity as well as full change. Full change helps to some extent correct for any differences at baseline. So we're really looking at that and that in itself gives us a good sense of the probability of success going forward. But as Ryan said, we also think what's important is the quality of T cell responses.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

And we've seen this before with 10/18, our COVID partners saw it. We saw it in our Phase one study where our quality of CD4 T cells with three or four activation markers is very similar to Shingrix. And we think that's going to be important too. Durability of T cell responses. So what do T cell responses look like?

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

What do antibody responses look like at one month, but also at six months as well? So we'll be looking at this whole constellation to get the best sense we can of what going forward in the Phase III efficacy study would look like.

[Matt Phipps, Group Head - Biotechnology at William Blair]

Okay. Thanks, Rob. And one last question. Thank you for Rob again. When we look at the safety, both from your previous Phase one, the Shingrix label and also the Kyervo Phase two, just wondering if there's any differences in kind of collection methods or definitions for some of these.

[Matt Phipps, Group Head - Biotechnology at William Blair]

Just wondering what we should be comparing to looking across some of those datasets.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

We don't really have access to their data collection instruments. However, FDA does and FDA does insist on these e diaries that subjects fill out during trials. They're pretty standard. They're not always standard in that the same events aren't always included in every trial, but across the main ones like fever, injection site pain, swelling for local, like fatigue and fever, those things are uniformly collected in pretty much in the same way. So but understand also in these early studies, they're certainly not powered to be be looking at this kind of data.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

We have great data from the COVID vaccines in combination with ALAM as well as HEPLISAV on what tolerability looks like for ten eighteen.

[Matt Phipps, Group Head - Biotechnology at William Blair]

Great. Thanks for taking my questions.

[Paul Cox, VP of Investor Relations & Corporate Communications at Dynavax]

Thanks, Matt.

[Operator]

Thank you. Our next question or comment comes from the line of Roy Buchanan from Citizens. Mr. Buchanan, your line is open.

[Roy Buchanan, Equity Research Analyst at Citizens]

Hey, thanks for taking the questions. I guess a couple on Shingrix and just following up on the durability, the data coming in 3Q. How much are you going to be able to tell from the one month post second dose results in terms of durability? And do you have any, I guess, longer follow-up data from the Phase one that you reported in 2023 that gives you confidence in the durability?

[Ryan Spencer, CEO at Dynavax]

Roy, I'll comment and Rob clean it up. We don't have long term data from the prior initial Phase one that was the sort of dose ranging on the adjuvant. But we have designed this Phase one to in particular look at six month and twelve month follow-up data. And so we will look at the initial response one month post second dose. I don't think we will able to determine durability from that initial readout.

[Ryan Spencer, CEO at Dynavax]

But importantly, as we advance the program, you heard in my comments that we will be moving forward from there into an extension study in the 70 year old population, 70 year old population. And that study to read out along with the six month data will provide us another sense of the strength of the product profile. Yes. I think

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

yes. So I think in terms of durability, we've certainly seen durability data for ten eighteen from HEPLISAV as well as from our partners with COVID vaccines that use ten eighteen and ALAM. As Ryan said, we only looked at one month data, but the mantra in vaccines is the higher the better, the higher at peak, the longer for both antibodies in CD4 T cells, but that's not always true. And there can be differential antibody or CD4 decay, particularly in the first six months. So I think we'll be able to pick up any changes or similarities during that period of time.

[Roy Buchanan, Equity Research Analyst at Citizens]

Okay, perfect. Thank you. And then on the extension study in the older adults, just what's the logic of that? I know they did a trial in that population for Shingrix and maybe that's the reason, but is you're looking to differentiate, is this a regulatory request? Can you just elaborate a little bit?

[Roy Buchanan, Equity Research Analyst at Citizens]

Thanks.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

It's two things. One, sorry, Ryan.

[Ryan Spencer, CEO at Dynavax]

Go ahead, Rob.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

Yes. So it's really two things. One is to be certain immunogenicity in that older age group looks similar to the younger age group. And this is the highest risk for shingles increases with increasing age. So the place we really want to work very well is in this 70 years and older age group.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

It's that, but then also it's get collecting safety data on this age group because you can't go into a Phase III study with no safety data on this age group when they're going to be a critical population enrolled in a Phase III study.

[Roy Buchanan, Equity Research Analyst at Citizens]

Okay, great. And then last one for me, maybe just on the buybacks. You guys did an accelerated first bit of the $200,000,000 I know you're guiding to the rest by the end of the year, but what's your appetite for maybe, and obviously more if you get to mid year and you've completed the extra $100,000,000 on the $200,000,000 how are you guys thinking about additional buybacks potentially earlier than the end of twenty twenty five? Thanks.

[Kelly MacDonald, CFO at Dynavax]

Yes, sure. Thanks, Roy. Thanks for the question. I mean, we definitely agree that buybacks are a great tool to return capital to shareholders when the IRR is out has the opportunity to outperform all their investments. I think very importantly for us, our primary objective is to drive long term value for all shareholders.

[Kelly MacDonald, CFO at Dynavax]

First and foremost, looking for opportunities to maximize HEPLISAV. Also, we have the opportunity to drive real progress in our clinical stage pipeline, including shingles, through the end of the year. And continue to look for opportunities to leverage our fully integrated organization that has significant capability to bring to bear for potentially other assets that can fit nicely in with our skill sets. To the extent that we get through the remainder of the authorized program, which we have committed to and we're very serious about, we absolutely will consider whether or not it makes sense to add additional buybacks. As you mentioned, we are actively, still ongoing with the current program.

[Kelly MacDonald, CFO at Dynavax]

So at this point in time, it doesn't make sense to extend the program, but certainly it's something on the list of opportunities for us as we learn more and get towards the second half of the year.

[Roy Buchanan, Equity Research Analyst at Citizens]

Okay. Thank you.

[Operator]

Thank you.

[Paul Cox, VP of Investor Relations & Corporate Communications at Dynavax]

Thanks, Roy.

[Operator]

Our next question or comment comes from the line of Jonathan Miller from Evercore ISI. Mr. Miller, your line is open.

[Jonathan Miller, Managing Director at Evercore ISI]

Hi guys. Thanks for taking my question and congrats on all the EPV progress. I guess, building on that last question, obviously there's been an investor pressure to return more capital, but looking at your capital allocation strategy slide, it seems like you'd rather be doing development both internal and external. But how confident are you at this point that there are good deals to do in your target areas from a BD perspective? And then sort of relatedly, what's giving you confidence that you'll be able to achieve those BD goals in a reasonable timeframe given how long you've been looking at this point?

[Ryan Spencer, CEO at Dynavax]

Yes. Jean, I'll take that one. So obviously, we continue to evaluate the landscape, which I think is important to recognize it's an ever changing landscape. It's not static, but it's still. So we've been very active in looking at ideas.

[Ryan Spencer, CEO at Dynavax]

We set a very high bar for this. We recognize that probably has a certain risk profile. We recognize we have certain capabilities and we want to leverage those. So we do believe through our efforts that there are reasonable targets for us to consider and there's additional developments that will continue to evolve over the course of the year. And so our confidence that there are high value transactions for us that fit INITAACS is pretty high.

[Ryan Spencer, CEO at Dynavax]

And I think beyond that, I think we really can't comment because this is complex. And so we're not going to be able to comment beyond the fact that we have a clear strategy. We're confident in our ability to execute it. We look forward to seeing how we progress against those objectives.

[Jonathan Miller, Managing Director at Evercore ISI]

All right. Maybe on shingles then I'll just ask, since we've had a couple of questions on durability and efficacy, but what level of safety differentiation do you view as commercially relevant? And maybe to a stronger extent, what level of differentiation would drive the sort of market share gains that you're hoping to see for like an HBV, dominant

[Ryan Spencer, CEO at Dynavax]

market share? Well, we're going to as we progress and have more robust and reliable data, we'll have to test the product profiles with traditional market research to make sure we are operating with the right assumptions. I think the kinds of differences we saw in our prior Phase one are meaningful. And I think an important point here is commercial execution is critical, whether it's hep B or shingles. If not, the product profile is a tool, but your commercial prowess and the ability to engage customers are equally as important.

[Ryan Spencer, CEO at Dynavax]

So we believe an improved safety profile is critical for us to be able to have something that allows us to address customers in a way that leverages our strengths with our customer engagement. The specific levels, I'm not able to comment on right now, but I would say that the levels we saw in our prior Phase one, we would suggest are significant and were part of the reason we were confident in continuing to advance the program.

[Jonathan Miller, Managing Director at Evercore ISI]

Makes sense.

[Jonathan Miller, Managing Director at Evercore ISI]

On hep B then maybe just finally, you've identified a couple of opportunity areas to grow market share in 2025, which is obviously great to hear. But as we start thinking about that long tail that you're talking about post 02/1930 or 02/1930 and beyond, how do the how durable is your market share going to be next to high weight commercial competitors that have portfolios of products and can do bundling and discounting and long term contracting? How durable are your current market share opportunities as we look to that tail?

[Donn Casale, Chief Commercial Officer at Dynavax]

Hey, John. This is Don. I think it's very durable. It goes beyond a contract. It goes around partnership.

[Donn Casale, Chief Commercial Officer at Dynavax]

So we've established ourselves extensively within retail for example, with partnerships and engagements over the last several years. We're working with these partners with a shared goal. They're looking to expand their utilization with hep B vaccine, specifically HEPLISAV B And we've been there from day one. And so we enable them to have success. And so that's going to continue obviously moving forward.

[Donn Casale, Chief Commercial Officer at Dynavax]

So we feel very good about that. And then to the long tail around where there's a lot of customers that we don't call on, those patients engage and go out to retail as well. So we feel like we're going to capture patients through the retail channel that are originating in the sole practitioner small clinics that originate in The U. S. So that strategy within retail and that's why we believe this segment will be this segment grows substantially over the next several years and we're well positioned to maintain and grow share as well as market size within retail with our partners.

[Ryan Spencer, CEO at Dynavax]

Yes. I think an important add on here just to have a full picture is this will be a durable product that Don laid out for all the reasons, but it will require us to maintain an effort in the marketplace. So this is not a situation and that should not be viewed as a situation where we establish market share and we don't have to cultivate that market continuously. So, we I think Kelly was clear about expectations around flattening of SG and A. And so we do believe we're right sized, but you should expect that we have to maintain a commercial effort to maintain the strength of this brand.

[Jonathan Miller, Managing Director at Evercore ISI]

Great. Thank you very much.

[Operator]

Thank you. Our next question or comment comes from the line of Phil Nadeau from TD Cowen. Mr. Nadeau, your line is open.

[Phil Nadeau, Managing Director, Health Care – Biotechnology Research Analyst at TD Cowen]

Good afternoon. Thanks for taking our questions and congrats on the progress. A couple of commercial then one back on the shingles program. So on the commercial, in terms of seasonality in HEPLISAV business, can you discuss what you're seeing now this winter in 2025? It does seem like seasonality was there in Q4, but maybe a bit less.

[Phil Nadeau, Managing Director, Health Care – Biotechnology Research Analyst at TD Cowen]

What does the beginning of 2025 look like?

[Donn Casale, Chief Commercial Officer at Dynavax]

Phil, thanks for the question. Yes, yes, in Q4, we saw the, I would say, traditional seasonality as it relates to the holiday season, the two weeks where there's less healthcare utilization. So that was typical and that's what we saw in Q4. Specifically around Q1, Q1 is also a stronger start relative to Q1 last year and we're very excited about the start thus far within retail in particular. We've noticed that the customers are focusing on non respiratory vaccines much faster and sooner this year than last year.

[Donn Casale, Chief Commercial Officer at Dynavax]

And so we're seeing a lot of momentum and we're very excited about what we've seen thus far and it really supports our guide in the range that we put out there today with what we're seeing here in Q1.

[Phil Nadeau, Managing Director, Health Care – Biotechnology Research Analyst at TD Cowen]

Got it. And so last year there was another sequential decrease from Q4 to Q1. It sounds like you're suggesting that may not be the case this year. Is that fair or is there still likely to be sequential decline?

[Donn Casale, Chief Commercial Officer at Dynavax]

I think it will be as different than last year. I think it won't be as profound as you saw last year from Q4 to Q1 given the fast start. So we'll have to wait and see how obviously the quarter plays out. But again, like I said before, early read is that Q1 is progressing very strong and much faster than in years past.

[Phil Nadeau, Managing Director, Health Care – Biotechnology Research Analyst at TD Cowen]

Got it. And in terms of the Medicare reimbursement, can you go into a bit more detail, I guess, exactly what's changed and what impact do you think that could have on HEPLISAV share in that channel? Yes. So

[Donn Casale, Chief Commercial Officer at Dynavax]

basically, hepatitis B vaccines were under Part B in Medicare. And so, pharmacists could not reimburse under Part B, only Part D as in David. And so what has happened is hepatitis B has been recognized similar to flu and pneumococcal vaccines under Part B under roster billing. And so that allows pharmacists and pharmacies to reverse the vaccine at the retail setting. And so it basically opens up the Medicare patient population for Hep B vaccine, whereas the four it was only TWINRIX which was a Part D vaccine.

[Donn Casale, Chief Commercial Officer at Dynavax]

And so it's important because within the retail pharmacy setting, the 60 plus cohort is about a third of the market and obviously Medicare is a big piece of that. So essentially it's allowed HEPLISAV B to be on equal footing from an access perspective. So we absolutely believe it will, as I said before, support not only market share gains, but also market growth for HEPLISAV B here in '25 and beyond.

[Phil Nadeau, Managing Director, Health Care – Biotechnology Research Analyst at TD Cowen]

Great. That's really helpful. And then last on the shingles program, it's sort of a follow on to Matt's question. You mentioned the CD4 positive T cells and the antibody responses are important, but then also the durability of the responses. It seems like there's at least four or five different elements of the responses you're going to be looking at.

[Phil Nadeau, Managing Director, Health Care – Biotechnology Research Analyst at TD Cowen]

Can you give us some sense of kind of is there a hierarchy of which of those is more important? Like how are you going to aggregate all the data, integrate it and decide to make a go, no go decision?

[Ryan Spencer, CEO at Dynavax]

Yes. So I'll give you the high level answer. We haven't been shy about the fact that we believe CD4s are critically important. So that hasn't changed. I think the reality is it's an element of the overall constellation of information that has to be considered when assessing immunogenicity.

[Ryan Spencer, CEO at Dynavax]

There is no correlate. So this is one of the challenges of vaccine development. You're in a position where you have to assess immunogenicity to approximate efficacy. And CD4s, we believe are critically important. However, all the elements of the immune response have to be considered.

[Ryan Spencer, CEO at Dynavax]

Rob, anything to add?

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

No, I think you said it pretty well, Ryan. I think CD4s seem to be critical. People who lack CD4s are the people at highest risk for shingles. When they get it, it's the most severe disease. But antibodies also seem to play a role.

[Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs at Dynavax]

Quality of T cells matters and antibodies matter too. So we will be looking at all of them, but CD4 response itself will probably be, let's say, a little more important than everything else.

[Phil Nadeau, Managing Director, Health Care – Biotechnology Research Analyst at TD Cowen]

Got it. Thanks for taking our questions.

[Ryan Spencer, CEO at Dynavax]

Thank you, Phil.

[Paul Cox, VP of Investor Relations & Corporate Communications at Dynavax]

Thanks, Phil.

[Operator]

Thank you. Our next question or comment comes from the line of Paul Choi from Goldman Sachs. Mr. Choi, your line is open.

[Analyst]

Hi, everyone. This is Khalil calling in for Paul. Thank you so much for taking our question. I guess like a couple of quick ones from me. Just on your guidance, I know someone brought this up already, but given the flu season this year being worse than last year and last year with the pressure and the fewer opportunities to vaccinate with respiratory vaccines.

[Analyst]

You said that there's been a stronger start to Q1 this year. And I was just wondering what was driving that? Is it more like access that's driving that stronger start than last year? Because it seems like cases are there's more cases than there were last year. And then how much of that is baked into your guidance?

[Analyst]

And then secondly, just on OpEx, I know you mentioned the high teens growth in 2025. Just wondering how to think about that from a timing perspective that things are ramp up towards the second half of the year or is it kind of right happening right now? Thank you so much.

[Ryan Spencer, CEO at Dynavax]

Let me take that first part of the question. So the flu season, the extended flu season of the second peak

[Ryan Spencer, CEO at Dynavax]

if we have it, that's going to be

[Ryan Spencer, CEO at Dynavax]

a little bit outside of flu vaccination protocol. So we're pretty late into a flu season here. The comments, Don, we're making about the fast start because we're going to get relatively limited guidance. We're still in the middle of the quarter. On Q1, it was really highlighting the retail pharmacy's focus on non respiratory vaccine initiatives.

[Ryan Spencer, CEO at Dynavax]

And we're seeing retail pharmacy make the pivot internally to non respiratory a little bit earlier than we saw last year. That's really the commentary is. And so, well, yes, we recognize the flu season has been extended. It's

[Ryan Spencer, CEO at Dynavax]

that's too subtle

[Ryan Spencer, CEO at Dynavax]

of a detail for us to work specifically through the HEPLISAVY guidance at this point. But overall, the faster start this year in retail is supportive of continued growth the year and our market share. Kelly, do you want to handle the OpEx?

[Kelly MacDonald, CFO at Dynavax]

Sure. So the guide on research and development expenses specifically was the expectation that we expect R and D expenses to increase by a high teens percentage you noted. Yes, I mean to be honest, this is really driven by this is activity based and there are two things going on in the clinics this year, sort of full steam ahead. One, the DoD put play program, that phase two contract, it kicked off late last year. So we'll have a full year we'll expect a full year of expenses there.

[Kelly MacDonald, CFO at Dynavax]

Again, just a reminder from prior disclosures that contract is $30,000,000 and will go through the first half of twenty twenty seven. And then secondly, we expect through the first three quarters to have expenses to support our ongoing efforts for Phase onetwo shingles study.

[Analyst]

Got it. That's all super helpful context. Thank you so much.

[Operator]

Thank you. Our next question or comment comes from the line of Ed White from H. C. Wainwright. Mr.

[Operator]

White, your line is open.

[Edward White, Managing Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC]

Thank you for taking my questions. So just going back to shingles, assuming that Phase one excuse me, the one month and six month data are positive, Let's just focus on the Phase III global study. Can you just give us your expectations for that study as far as size goes and maybe timing for that study?

[Ryan Spencer, CEO at Dynavax]

Thanks, Ed. We still have some work to do on that with the regulators. Obviously, we need to see this data, meet with the regulators and develop the overall plan. There's a couple of different options we're considering on how to run that study, and we want to evaluate all the data that we receive from our current Phase onetwo as well as our BD and partnering efforts to optimize that plan. So it's a little premature for us to provide too many details on that study.

[Ryan Spencer, CEO at Dynavax]

I think for a point of reference, there is the Shingrix development plan that you can reference as far as what it takes to drive a placebo controlled shingle study. But we don't have we're not prepared to comment specifically on that trial design or timeline.

[Edward White, Managing Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC]

Okay. Thanks, Ryan. And just on the PLAGUE program, as we all know, there's no approved vaccine in The U. S. Wanted to get your thoughts on what or how are you thinking about the size of the potential market here in stockpiling for The U.

[Edward White, Managing Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC]

S. And perhaps also globally?

[Ryan Spencer, CEO at Dynavax]

Yes. The reality is it depends, Ed, on how the threat is assessed by the government. There's very specific processes for the government to assess threats for biological measures or countermeasures. And so you see different options. And right now the arrangement with the DoD, which was funding the work here, we would assume that a minimum is focused on the DoD or our troops, which is a much lower opportunity than a threat that is deemed to be a concern for the entire population.

[Ryan Spencer, CEO at Dynavax]

It's frankly too premature for us to understand how that would be seen. And I think frankly that also has the overall global climate has an impact on that. So for now, the goal is to do the work, create a optimized product profile, and then we'll have to see how the opportunity kind of unfolds as we progress further.

[Edward White, Managing Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC]

Okay. Thank you.

[Paul Cox, VP of Investor Relations & Corporate Communications at Dynavax]

Thank you.

[Operator]

Thank you. Our next question or comment is a follow-up from Mr. Roy Buchanan from Citizens. Your line is open, sir.

[Roy Buchanan, Equity Research Analyst at Citizens]

Thanks for taking the follow-up. Ed actually got most of it. But I guess what's your, so bit in the future, but your willingness to pay for the Phase III for shingles assuming that they're likely to be large to some extent? Thanks.

[Ryan Spencer, CEO at Dynavax]

Right. Thanks, Roy. That's actually very helpful just to make sure it's very clear. We have a very clear stated strategy for business development for this program focusing on ex U. S.

[Ryan Spencer, CEO at Dynavax]

Markets. The ex U. S. Markets for shingles, we believe will be quite significant and a large value driver for the program, which provides a great opportunity for us to leverage it from a BD perspective to reduce the overall financial risk advancing into Phase III. We also think it's a very valuable point to validate our interpretation of the data and the opportunity.

[Ryan Spencer, CEO at Dynavax]

So we plan to leverage the Phase onetwo data, the one month, six month and the seven year old data as part of an ongoing BD strategy to support risk reduction for Dynavax and Dynavax shareholders around entering into the Phase IIb or Phase IIb3 or Phase III study. So I think right now our willingness is high, especially if we have the right immunogenicity profile because we believe there's room to compete and Dynavax is well positioned to compete and capture a very significant portion of the market share. Ultimately, the best scenario would be for us to have an external ex USPD partner, both to commercialize as well as absorb the cost and risk of the Phase three trial.

[Roy Buchanan, Equity Research Analyst at Citizens]

Okay. Thank you.

[Operator]

Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Ryan Spencer for any closing remarks.

[Ryan Spencer, CEO at Dynavax]

Thank you, operator. Thank you all for joining us today. We appreciate your interest in DynaDex. We're excited about our recent accomplishments, the strength of our position. We look forward to updating you on our progress focused on protecting the world against infectious diseases.

[Ryan Spencer, CEO at Dynavax]

Operator, you may end the call.

[Operator]

Ladies and gentlemen, thank you for joining us today. This concludes the conference call. You may now disconnect.

Participants

Executives

• Ryan Spencer, CEO
• Robert Janssen, Chief Medical Officer and Senior VP of Clinical Development, Medical & Regulatory Affairs

Analysts

• Paul Cox, VP of Investor Relations & Corporate Communications at Dynavax
• Donn Casale, Chief Commercial Officer at Dynavax
• Kelly MacDonald, CFO at Dynavax
• Matt Phipps, Group Head - Biotechnology at William Blair
• Roy Buchanan, Equity Research Analyst at Citizens
• Jonathan Miller, Managing Director at Evercore ISI
• Phil Nadeau, Managing Director, Health Care – Biotechnology Research Analyst at TD Cowen
• Analyst
• Edward White, Managing Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC