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Dynavax Technologies Corp. Reports Operating Results (10-Q)

May 10, 2010 | About:

Dynavax Technologies Corp. (NASDAQ:DVAX) filed Quarterly Report for the period ended 2010-03-31.

Dynavax Technologies Corp. has a market cap of $91.87 million; its shares were traded at around $1.69 with and P/S ratio of 2.28. DVAX is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Collaboration revenue in 2009 included recognition of $15.5 million of deferred revenue associated with the upfront payment from Merck, which was accelerated through June 2009 following Mercks termination of the collaboration for HEPLISAV. Collaboration revenue in 2010 included $4.0 million from Merck in satisfaction of its obligations for the wind down period following termination. Grant revenue for the three months ended March 31, 2010 decreased from the same period in 2009 due primarily to the expiration of our NIH Flu grant in July 2009. Services and license revenue for the first quarter 2010 decreased as compared to 2009 as a result of a decline in royalty revenue and manufacturing services from Rhein Biotech GmbH (Rhein or Dynavax Europe).

Other income (expense) for the three months ended March 31, 2010 includes the change in fair value of the warrant and contingent liabilities to Holdings and foreign currency translation adjustments. For the quarter ended March 31, 2010, we recognized a gain of $0.3 million from the change in fair value of the warrant liability, which was offset by a loss of $69 thousand from the change in fair value of the contingent liability and a loss of $18 thousand from foreign currency translation.

Cash provided by financing activities was $0.9 million during the three months ended March 31, 2010 compared to $37 thousand for the same period in 2009. The increase was primarily attributed to the proceeds from the sales of our common stock under an equity distribution agreement entered into with Wedbush Morgan Securities (Wedbush) on August 17, 2009. Pursuant to the agreement we may offer and sell shares of our common stock having an aggregate offering price of up to $15 million from time to time through Wedbush as our sales agent or to Wedbush as a principal. During the three months ended March 31, 2010, we sold 800,860 shares of common stock under the agreement with Wedbush as our sale agent for net proceeds of $0.9 million after deducting commissions paid to Wedbush and offering expenses. As of March 31, 2010, we could offer and sell from time to time through Wedbush up to an additional $11.1 million in common stock under this agreement.

On April 16, 2010, we completed an underwritten public offering resulting in net proceeds of $41.1 million, after deducting the underwriting discount and estimated offering expenses of approximately $3.0 million, from the sale of 30,293,000 units at a per unit price of $1.4525. Each unit consisted of one share of common stock and one warrant to purchase 0.5 of a share of common stock. Each warrant has an exercise price of $1.50 per share, and is exercisable for a period of five years from the date of issuance. As a result of this offering, Symphony and certain related investors received an additional 1,076,420 shares of common stock and new warrants to purchase 7,038,210 shares of common stock having the same terms as the warrants sold in the offering, pursuant to the anti-dilution provisions of the Amended and Restated Purchase Option Agreement with Symphony. The warrants to purchase 2,000,000 shares of common stock previously issued to Symphony and its related investors in connection with the November 2009 Amended and Restated Purchase Option Agreement were cancelled.

As part of the consideration transferred from Dynavax to Holdings for the acquisition of SDI, the Company is obligated to make contingent cash payments equal to 50% of the first $50 million from any upfront, pre-commercialization milestone or similar payments received by us from any agreement with any third party with respect to the development and/or commercialization of the cancer and hepatitis C therapies. Using a discounted cash flow model, we estimated the fair value of the contingent liability to be $3.1 million as of March 31, 2010.

During the fourth quarter of 2004, we established a letter of credit with Silicon Valley Bank as security for our Berkeley Lease in the amount of $0.4 million. The letter of credit remained outstanding as of March 31, 2010 and is collateralized by a certificate of deposit which has been included in restricted cash in the consolidated balance sheets as of March 31, 2009 and December 31, 2009. Under the terms of the Berkeley Lease, if the total amount of our cash, cash equivalents and marketable securities falls below $20.0 million for a period of more than 30 consecutive days during the lease term, the amount of the required security deposit will increase to $1.1 million, until such time as our projected cash and cash equivalents will exceed $20.0 million for the remainder of the lease term, or until our actual cash and cash equivalents remains above $20.0 million for a period of 12 consecutive months.

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