Dynavax Technologies Corporation Q2 FY2025 earnings call

• HEPLISAV-B showed robust performance with $92 million in Q2 net product revenue, a 31% year-over-year increase, and a 45% market share in Q2. The company updated the full-year revenue guidance for HEPLISAV-B. - The U.S. adult hepatitis B vaccine market is shifting toward retail, with retail segment annual dose utilization increasing by approximately 35% in Q2. The company now anticipates the retail segment will account for at least 50% of total hepatitis B doses by 2030. - The vaccine pipeline is on track: the novel shingles program is in Phase I/II development and expected to report top-line immunogenicity and safety results soon; the pandemic influenza adjuvant program completed enrollment in Q2 2025 and will report safety and immunogenicity data next year; the plague vaccine program, in collaboration with the U.S. Department of Defense, plans to initiate Phase II trial in the second half of 2025. - Financially, Q2 HEPLISAV-B gross margin was 85%, up from 83% in Q2 2024; R&D expenses were $17 million in Q2 2025; SG&A expenses were $50 million in Q2 2025, with the increase related to a proxy contest campaign; the company ended Q2 with $614 million in cash, cash equivalents, and marketable securities after completing a $200 million share repurchase program.

In the second quarter of 2025, Dynavax achieved its highest-ever revenue quarter for HEPLISAV-B, with net product revenue of $92 million, representing a 31% year-over-year increase. HEPLISAV-B held an estimated 45% market share in the U.S. adult hepatitis B vaccine market in Q2, up from 42% in the prior year quarter. The company updated its full-year 2025 HEPLISAV-B net product revenue guidance to $315 million to $325 million, raising the prior low end of the range. Beyond HEPLISAV-B, the vaccine pipeline progresses with key clinical milestones, including the novel shingles program expecting top-line results soon, the pandemic influenza adjuvant program having completed enrollment in Q2 2025, and the plague vaccine program set to initiate Phase II trial in the second half of the year.

• HEPLISAV-B net product revenue for 2025 is expected to be in the range of $315 million to $325 million. - Adjusted EBITDA is anticipated to be at least $75 million for the year. - The company updated the long-term market outlook for the retail segment, expecting it to account for at least 50% of total hepatitis B doses by 2030.

• Forward-looking statements involve risks and uncertainties, including potential market sizes, market segmentation, effective marketing efforts, future expected market share and growth rates, ACIP recommendation impact, timing and results of FDA submissions, clinical trial starts and data readouts, and potential future uses of or demand for CpG 1018 adjuvant. Actual results may differ materially from expectations. These risks are summarized in the press release and detailed in the Risk Factors section of SEC filings.

Q: Thanks for a lot of additional granularity around some of the market dynamics and market share here and glad to see that market share tick-up in the quarter. With the shingles readout obviously coming pretty soon, I know you also talked previously about hoping to see CD4 T cells, I think, you said within 75% of Shingrix as what you think could be -- result in comparable efficacy. Just wanted to kind of check on that number. And then also, is that the 1-month time point or is that a 6- or 12-month time point where you want to be within that range of Shingrix?

A: Matt, thanks for that question. Rob, why don't you take that? Sure. So at 1 month, what we're going to be looking at is VRR for the -- as a composite endpoint, both CD4 and antibody vaccine response rate. Our concern, as we've talked to more experts around CD4s, we have small numbers of subjects, and because of that, we're concerned about the variability across the assays and across subjects. So we're focusing more on VRR at the initial time point. Over time, we will be looking at VRR also at 6 and 12 months. But at that point, we'll be looking more at CD4 and antibody levels over time and see how they change over time in comparison to Shingrix. So the 75%, we certainly will be looking at it but we also will be looking at other factors as well with VRR sort of leading the charge. Because, Matt, sorry, we really -- the first thing we want to see is sort of a robust immune response, both an antibody response and CD4 response.

Q: Congratulations on the progress. A couple of commercial questions from us. First, in terms of HEPLISAV's performance in the quarter, it was obviously very strong. Were there any onetime issues during the quarter, anything like inventory build or big lumpy orders that happened during the quarter? That's the first question. And then second, on the market share segments. It looks like the other segment is almost 1/3 of the market and that's where your share is the lowest. Could you talk a little bit more about that segment of the market? What comprises it? And do you have any plans to be more aggressive at marketing into it?

A: Phil, it's Donn. Regarding any onetime issues or stock-ins in the quarter, no. It was just a widespread adoption, particularly by retail in particular, for the quarter that gave us the strong output for the second quarter results. With regards to other, it's a combination of a bunch of smaller segments, so military corrections, small clinics. And so it's kind of the long tail of customers and so the reach there is usually challenging. But again, as we said, I think on previous calls, when we think about the strategy, the patients that originate in a lot of those small clinics, which is a part of the other, they also originate in pharmacy and retail pharmacy. So our strategy is to capture the patient where they originate within the retail pharmacy segment. And we're seeing that happen and we're seeing the continued shift, obviously, of the patients to retail, which aligns with our strategy and where we're most successful. So we anticipate continued increases in overall market share due to that fact of increase in retail utilization and market mix and our share in that segment.

Q: Congrats on the progress. I'd love to start with the shift to retail that you talked a little bit about today. What's driving that shift to retail? And it looks like a lot of that's coming away from IDNs, which I know was another focus area for you in the past. So given that shift in the way the market is operating, not surprised necessarily, but I'm interested to see that your long-term guidance has remained exactly the same. Is there anything that's changing in the way that you're operating in this market that gives you confidence in the ability to keep that long-term guidance exactly the same even as the market is sort of shifting around?

A: So Jon, I'll take that. With regards to the shift, hep B is following what we've seen with other vaccines. We see it in, obviously, zoster, pneumococcal and flu. You see the continued shift post-pandemic, in particular, retailers being more proactive on patient outreach around adult vaccines, and hep B is following that trend. And so we continue to see that. We're seeing it throughout the quarters. We're right on trend, quite frankly, with the shift here in this quarter. As we project out into 2030, that retail will be at least 50%, if not more. So again, it goes back to the fact that it's following other adult vaccines, the infrastructure, the capabilities of retail and convenience for the consumer and the patient are all the things that are supporting that. And it really fits in line right with our long-term guidance. So we think about having 60% of the market, it's really underpinned by the fact that retail is going to be a big part of that market where we have a tremendous, as I said before, infrastructure, relationships and momentum with the key customers within the retail segment.

Q: I just had a quick one. I assume you saw the CorMedix deal from Melinta today. Clearly, you guys have the capital to do that deal. Is there a strategic reason something like that isn't particularly a fit for Dynavax? And have there been any changes in BD intensity or focus areas with your moving the H5N1 and Lyme programs forward?

A: Roy, I'm sorry, we're not familiar with the deal. Obviously, we've been a little focused on our events for today so I can't comment on whether or not. But if you want to give me a quick summary of more specifically what your question is on the type of deal, I can see if we can provide our thoughts. Yes. So CorMedix bought Melinta and Melinta has a portfolio of hospital antibiotics and some other programs. Yes, so I guess, can it be accretive? Yes, we're familiar with the Melinta portfolio and we have looked at a variety of different in-line products and portfolios. The reality is when we think about different opportunities, we're trying to leverage our areas of strength. So for example, inpatient hospital sales for a relatively portfolio of small individual brands is not something that has been at the top of our list. We really are looking forward to leveraging our vaccine development capability and our institutional sales capability. That is not quite the same as inpatient capability. So from that perspective, that is not a specific area that we targeted. And then -- and can you just remind me of the second part to your question, please? Yes. Just if there's been any change in your focus or intensity around BD efforts having moved the H5N1 and the Lyme programs forward? No. I mean, I wouldn't suggest that those 2 programs changed our desire to find synergistic and opportunistic and accretive opportunities. Those are relatively early-stage programs. As a reminder, H5N1 is a fairly discrete clinical investment. We're excited to be able to generate the data that will support many years of BD activities as an adjuvant supplier, but it is a fairly discrete singular investment in clinical development. And the Lyme disease program, again, a very interesting and exciting opportunity to leverage the power of our adjuvant for a known approach to protecting against Lyme disease. But again, that's an early-stage preclinical work in nonhuman primates and IND-enabling studies. So relatively small capital requirements at the moment, so they don't have an impact on our focus on BD and corporate development.

Q: Can you hear me?

A: Yes. Hey, Paul. I want to ask first just on the plague program. Just sort of what -- I guess, given the sort of moving pieces in the vaccine support from the government, just what the DoD commitment is here and just how much of your future development plans are contingent on that? And then second, on Lyme disease. I know you guys are going to kick it off IND-enabling studies with clinical development in 2027, so a little bit off. But just in terms of enrolling that with patients, just how much of a seasonal element is that? And how would that potentially affect enrollment time lines there?

A: Okay. So DoD, I mean, I think we -- I think the point around the DoD commitment compared to our commitment, we are 100% aligned to the DoD on this program. We will not be advancing the plague program independent of full support from the Department of Defense. As it relates to -- which I assume is underpinning some of this question is the continued shift we see with the USG. We have -- continue to have strong relationships with the DoD as it relates to this program with funding for this program already being awarded. And it's funded through the first half of 2027 based on the award already granted. Obviously, we would update that to the extent we learn anything else along the way. But as of now, this continues to be business as usual with no indication of any issue from the DoD's perspective as it relates to funding the program. As it relates to Lyme disease and enrollment, we have to get into really the trial design. We're going to have a way to go before we do our efficacy study, which, of course, we'll have to be thoughtful about seasonality for an efficacy study, especially given some of the challenges of the currently developed Lyme products in development. So I do expect we'll be thoughtful about seasonality and durability, given the fact that, that is a key element of our product profile is to be able to have durability through multiple seasons. So that will be definitely a part of the clinical development plan. But it will be a little bit further off, given that our next few studies will be more focused on safety and immunogenicity.