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Dynavax Technologies Shares Rise on Hope for New Vaccine

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In a report released Tuesday, FDA staff didn't raise any major concerns about the safety or effectiveness of an experimental vaccine for the hepatitis B virus. The news has investors hopeful Dynavax will win US approval to sell its lead product candidate.

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MINYANVILLE ORIGINAL Dynavax Technologies (NASDAQ:DVAX), a company given up for dead just a few years ago, is getting a boost Tuesday on hope that its vaccine for hepatitis B will be approved for sale. Documents released by Food and Drug Administration staff ahead of review of the drug this week didn't raise any major concerns about the safety or effectiveness of the treatment.

That was enough to send the shares up 19% to $4.97 in midday trading Tuesday. The stock is now up 75% in the past 12 months and has made quite a comeback since trading at $0.16 a share in November 2008.

A panel of expert advisers to the FDA will meet Thursday to review Dynavax's vaccine. The advisers' endorsement will be help the FDA decide whether to approve the treatment. The agency is expected to decide by February 2013.

Dynavax is trying to win approval of Heplisav, a vaccine for hepatitis B that would compete with products on the market made by Merck (NYSE:MRK) and GlaxoSmithKline (NYSE:GSK). While infants are routinely vaccinated, Dynavax is seeking approval only for adults. Berkeley, California-based Dynavax says its vaccine can work faster and better to protect against the virus and requires fewer doses than those therapies, Glaxo's Engerix-B and Merck's Recombivax-HB. The global market for adult hepatitis B vaccines is about $700 million a year, Dynavax says.

It seemed like Heplisav was doomed just a few years ago. Dynavax penned an agreement with Merck in 2007 to develop the vaccine. By spring of 2008, the FDA slapped a clinical hold on the treatment because of safety concerns. (In a human study testing the vaccine, a patient developed a rare autoimmune condition.) That hold was ultimately lifted in 2009, but Merck didn't stick around. The partnership between the two companies was ended in December 2008.

FDA staff said in their briefing that Heplisav appeared to be effective. Safety was expected to be a topic of debate even before the FDA briefing documents were disclosed. Dynavax is proposing a post-approval study of Heplisav to determine if there are any serious safety issues, including autoimmune disease.

In a recent note, William Blair analyst Katherine Xu gives Heplisav a 90% chance of reaching market. She predicts the drug can become the standard of care for adult hepatitis B vaccines within six years.

Twitter: @brettchase

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