Why Dynavax Technologies' Stock Tanked in June

What happened

Dynavax Technologies (NASDAQ: DVAX) , a small-cap vaccine company, saw its shares lose a noteworthy 17.2% of their value in June, according to data from S&P Global Market Intelligence . What went wrong for the biotech last month?

Dynavax’s shares have been in free fall ever since the company announced a strategic restructuring designed to prioritize the commercialization of its FDA-approved hepatitis-B vaccine known as Heplisav-B, as well as the sudden retirement of CEO Eddie Gray slated to go into effect on Aug. 1, 2019. In fact, the biotech’s shares have dropped by an eye-catching 30% since these two material events became public knowledge on May 23, 2019.

Black and white chalkboard chart showing a downward-trending arrow.

Image Source: Getty Images.

So what

Dynavax’s restructuring effort effectively signals the end of the biotech’s foray into immuno-oncology. Wall Street, in turn, rightfully frowned upon this disappointing development for two interrelated reasons. Namely, Heplisav’s commercial launch has been painfully slow, leading investors to place a heavy emphasis on the company’s immuno-oncology pipeline as a key source of future value creation. Driving this point home, Heplisav’s annual sales are on track to fall well short of $50 million this year, which is a far cry from the company’s peak sales estimate of $500 million per year.

Now what

On the bright side, Wall Street has Heplisav’s sales picking up in a big way starting next year, perhaps making Dynavax a compelling bargain buy at these levels. As things stand now, the biotech’s shares are trading at a fairly reasonable 3.1 times the company’s projected 2020 revenue. That’s not a ridiculously cheap valuation, but it is below average for a biotech with a fairly new product on the market. So while a lucrative immuno-oncology partnership no longer appears to be in the cards, Dynavax’s stock might be worth considering after this steep drop-off due to the simple fact that Heplisav is slowly but surely gaining market share.

10 stocks we like better than Dynavax Technologies

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Dynavax Technologies wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of June 1, 2019

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Referenced Symbols: DVAX

Zeen is a next generation WordPress theme. It’s powerful, beautifully designed and comes with everything you need to engage your visitors and increase conversions.

Wealth Empire Newsletter
Register now for free updates and alerts

Subscribe By

Note: I have the ability to revoke this permission at any time and ask for the removal of my personal data collected by contacting us or simply clicking Unsubscribe.