Dynavax Applied sciences: Nonetheless A Strong Decide For 2024 (NASDAQ:DVAX)

Information are threatening to these invested in fraud.”― DaShanne Stokes.

In the present day, we put Dynavax Applied sciences Company (NASDAQ:DVAX) in the highlight as 2024 commences. It is a title that has been a rock-solid covered call holding inside my portfolio for a number of years. The corporate obtained a burst a income from the Covid pandemic, which has now all however utterly dissipated. Nonetheless, this bounty helped the corporate bolster its money reserves, set up itself as the usual of care within the hepatitis B vaccine market, and transition to persistently worthwhile firm. An evaluation for what’s forward within the new 12 months follows beneath.

Firm Overview:

Dynavax Applied sciences relies simply outdoors of San Francisco. Nearly all of the corporate’s revenues over nearly all of 2021 and 2022 had been resulting from an adjuvant they’ve developed known as CpG 1018. The product turned a core a part of a number of COVID-19 vaccine merchandise outdoors of the US. Because the pandemic has now develop into endemic, that income supply is all however defunct for the time being.

Nonetheless, Dynavax’s core long-term asset and franchise is HEPLISAV-B. It is a vaccine for Hepatitis B. This vaccine has quickly market share since accredited late in 2017, as it’s simpler (95% versus 81%) from the earlier customary of care Entergis-B. This vaccine can also administer by way of two doses over a month reasonably and three doses over six months, thus reaching a a lot larger degree of compliance. Of notice, HEPLISAV-B was developed off Dynavax’s toll-like receptor [TLR] immune modulation platform. The inventory at present trades at $14.00 a share and sports activities an approximate market capitalization of $1.8 billion.

Third Quarter Outcomes:

Dynavax Applied sciences posted its Q3 results on November 2nd. The corporate delivered GAAP earnings per share of 11 cents, the consensus was for a one penny a share loss. Revenues did fall practically 59% on year-over-year foundation to $69.5 million, however that was $8 million above expectations.

HEPLISAV-B accounted for $62.3 million of total revenues and rose 66% from the identical interval a 12 months in the past. Impressively, HEPLISAV-B garnered 41% of the U.S. hepatitis B vaccine market within the third quarter, up from 32% on the finish of 3Q2022. As a result of robust quarter, management raised FY2023 HEPLISAV-B web product gross sales steering to $210 million to $220 million from $200 million to $215 million beforehand.

The corporate additionally has additionally potential vaccine candidates in early growth. One effort includes combining its CpG 1018 inside a simpler plague vaccine. Funded partially by the Division of Protection, Part 2 outcomes for this effort needs to be out this 12 months. Related efforts are additionally being develop for probably simpler vaccines for Shingles and TDAP as properly.

Analyst Commentary & Steadiness Sheet:

TD Cowen ($25 value goal), H.C. Wainwright ($28 value goal) and JMP Securities ($27 value goal) all reiterated Purchase scores on the inventory instantly following the discharge of third quarter outcomes.

Roughly 12% of the excellent float within the shares is at present held quick. A number of insiders bought shares within the second half of 2023. Collectively, they bought roughly $25 million value of shares. Nonetheless, the bulk was one simply over $21.5 million disposal made in early August. The corporate ended the third quarter with some $720 million in money and marketable securities on its balance sheet.

Verdict:

Because of its massive Covid vaccine adjuvant gross sales, the corporate made $1.97 a share in FY2022 on gross sales of $722 million. Now that these revenues have been misplaced, the analyst agency consensus sees a lack of 11 cents a share on gross sales of simply $235 million in FY2023. They venture earnings and gross sales will rebound in FY2024 the place they’ve penciled in 31 cents a share of earnings on gross sales development of 23%. It needs to be famous that Dynavax has guided it’s going to generate constructive free money movement for the 2023 fiscal 12 months.

Administration continues to consider that the U.S. market alternative for HEPLISAV-B will probably be over $800 million yearly. The corporate needs to be persistently worthwhile and seeing earnings develop considerably began in FY2024. Add within the big money steadiness and DVAX continues to have a good threat/reward profile, and one I plan to proceed to primarily maintain utilizing lined name positions given the choices in opposition to the fairness are each profitable and liquid.

Reality waits to be discovered. It searches for nobody.”― Suzy Kasse.