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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to           .

Commission file number: 001-34207

 

Dynavax Technologies Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

33-0728374

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer
Identification No.)

2100 Powell Street, Suite 900

Emeryville, CA 94608

(510) 848-5100

(Address, including Zip Code, and telephone number, including area code, of the registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading symbol(s):

Name of each exchange on which registered:

Common Stock, $0.001 par value

DVAX

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No 

As of August 2, 2019, the registrant had outstanding 65,154,729 shares of common stock.

 

 

 


INDEX

DYNAVAX TECHNOLOGIES CORPORATION

 

 

Page No.

PART I FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements (unaudited)

4

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

4

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018

5

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2019 and 2018

5

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2019 and 2018

6

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018

7

 

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

28

Item 4.

Controls and Procedures

28

 

PART II OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

44

Item 5.

Other Information

44

Item 6.

Exhibits

45

 

SIGNATURES

47

 

2


FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to a number of risks and uncertainties. All statements that are not historical facts are forward-looking statements, including statements about our ability to successfully commercialize HEPLISAV-B® and our anticipated market opportunity and level of sales of HEPLISAV-B, our ability to successfully develop and timely obtain regulatory approval of SD-101, DV281 and our other early stage compounds or successfully pursue strategic alternatives for such compounds, our business, collaboration and regulatory strategy, our ability to achieve anticipated cost reductions and whether or not we may incur other material charges not currently contemplated due to events that may occur as a result of, or associated with our restructuring, our intellectual property position, our product development efforts, our ability to manufacture commercial supply and meet regulatory requirements, the timing of the introduction of our products, uncertainty regarding our capital needs and future operating results and profitability, anticipated sources of funds, liquidity and cash needs, as well as our plans, objectives, strategies, expectations and intentions. These statements appear throughout this Quarterly Report on Form 10-Q and can be identified by the use of forward-looking language such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” or “intend,” or the negative of these terms or other variations or comparable terminology.

Actual results may vary materially from those in our forward-looking statements as a result of various factors that are identified in “Item 1A—Risk Factors” and “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this document. No assurance can be given that the risk factors described in this Quarterly Report on Form 10-Q are all of the factors that could cause actual results to vary materially from the forward-looking statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Readers should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking statements are not guarantees of future performance. We assume no obligation to update any forward-looking statements.

This Quarterly Report on Form 10-Q includes trademarks and registered trademarks of Dynavax Technologies Corporation. Products or service names of other companies mentioned in this Quarterly Report on Form 10-Q may be trademarks or registered trademarks of their respective owners. References herein to “we,” “our,” “us,” “Dynavax” or the “Company” refer to Dynavax Technologies Corporation and, where appropriate, its subsidiary Dynavax GmbH.

 

 

 

3


PART I. FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

Dynavax Technologies Corporation

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

 

 

June 30,

 

 

December 31,

 

 

2019

 

 

2018

 

 

(unaudited)

 

 

(Note 1)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

34,225

 

 

$

49,348

 

Marketable securities available-for-sale

 

106,269

 

 

 

96,188

 

Accounts and other receivables, net

 

7,582

 

 

 

3,704

 

Inventories, net

 

36,629

 

 

 

19,022

 

Prepaid expenses and other current assets

 

6,745

 

 

 

6,102

 

Total current assets

 

191,450

 

 

 

174,364

 

Property and equipment, net

 

34,393

 

 

 

17,064

 

Intangible assets, net

 

7,147

 

 

 

11,717

 

Operating lease right-of-use assets

 

29,533

 

 

 

-

 

Goodwill

 

2,131

 

 

 

2,144

 

Restricted cash

 

628

 

 

 

619

 

Other assets

 

1,799

 

 

 

4,976

 

Total assets

$

267,081

 

 

$

210,884

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

11,226

 

 

$

5,278

 

Accrued research and development

 

5,501

 

 

 

9,714

 

Accrued liabilities

 

19,550

 

 

 

16,041

 

Other current liabilities

 

8,296

 

 

 

7,000

 

Total current liabilities

 

44,573

 

 

 

38,033

 

Long-term debt, net

 

176,636

 

 

 

100,871

 

Long-term portion of lease liabilities

 

34,641

 

 

 

-

 

Other long-term liabilities

 

643

 

 

 

8,915

 

Total liabilities

 

256,493

 

 

 

147,819

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock: $0.001 par value; 5,000 shares authorized at June 30, 2019 and

  December 31, 2018; no shares issued and outstanding at June 30, 2019 and

  December 31, 2018

 

-

 

 

 

-

 

Common stock: $0.001 par value; 139,000 shares authorized at

  June 30, 2019 and December 31, 2018; 65,155 and 62,862 shares

  issued and outstanding at June 30, 2019 and December 31, 2018, respectively

 

65

 

 

 

63

 

Additional paid-in capital

 

1,161,115

 

 

 

1,131,241

 

Accumulated other comprehensive loss

 

(1,983

)

 

 

(2,015

)

Accumulated deficit

 

(1,148,609

)

 

 

(1,066,224

)

Total stockholders’ equity

 

10,588

 

 

 

63,065

 

Total liabilities and stockholders’ equity

$

267,081

 

 

$

210,884

 

 

See accompanying notes.

4


Dynavax Technologies Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue, net

$

8,301

 

 

$

1,254

 

 

$

13,928

 

 

$

1,419

 

Collaboration revenue

 

-

 

 

 

-

 

 

 

146

 

 

 

-

 

Total revenues

 

8,301

 

 

 

1,254

 

 

 

14,074

 

 

 

1,419

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales - product

 

2,141

 

 

 

5,177

 

 

 

3,941

 

 

 

5,382

 

Cost of sales - amortization of intangible assets

 

2,297

 

 

 

2,298

 

 

 

4,570

 

 

 

4,715

 

Research and development

 

16,196

 

 

 

16,273

 

 

 

37,402

 

 

 

35,239

 

Selling, general and administrative

 

17,861

 

 

 

15,653

 

 

 

36,209

 

 

 

32,544

 

Restructuring

 

8,777

 

 

 

-

 

 

 

8,777

 

 

 

-

 

Total operating expenses

 

47,272

 

 

 

39,401

 

 

 

90,899

 

 

 

77,880

 

Loss from operations

 

(38,971

)

 

 

(38,147

)

 

 

(76,825

)

 

 

(76,461

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

979

 

 

 

1,153

 

 

 

1,714

 

 

 

1,893

 

Interest expense

 

(4,598

)

 

 

(2,691

)

 

 

(7,332

)

 

 

(3,852

)

Other (expense) income, net

 

(123

)

 

 

241

 

 

 

58

 

 

 

18

 

Net loss

$

(42,713

)

 

$

(39,444

)

 

$

(82,385

)

 

$

(78,402

)

Basic and diluted net loss per share

$

(0.66

)

 

$

(0.63

)

 

$

(1.28

)

 

$

(1.26

)

Weighted average shares used to compute basic and diluted net loss

   per share

 

65,088

 

 

 

62,346

 

 

 

64,436

 

 

 

62,047

 

 

 

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

$

(42,713

)

 

$

(39,444

)

 

$

(82,385

)

 

$

(78,402

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities available-for-sale

 

108

 

 

 

17

 

 

 

176

 

 

 

(5

)

Foreign currency translation adjustments

 

340

 

 

 

(1,314

)

 

 

(144

)

 

 

(624

)

Total other comprehensive income (loss)

 

448

 

 

 

(1,297

)

 

 

32

 

 

 

(629

)

Total comprehensive loss

$

(42,265

)

 

$

(40,741

)

 

$

(82,353

)

 

$

(79,031

)

 

See accompanying notes.

5


Dynavax Technologies Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

Shares

 

 

Par Amount

 

 

Additional

Paid-In Capital

 

 

Accumulated Other

Comprehensive

(Loss) Income

 

 

Accumulated

Deficit

 

 

Total

Stockholders'

Equity

 

Balances at March 31, 2019

 

65,020

 

 

$

65

 

 

$

1,151,421

 

 

$

(2,431

)

 

$

(1,105,896

)

 

$

43,159

 

Issuance of common stock upon exercise of stock

   options and restricted stock awards, net

 

91

 

 

 

-

 

 

 

19

 

 

 

-

 

 

 

-

 

 

 

19

 

Issuance of common stock, net of issuance costs

 

44

 

 

 

-

 

 

 

326

 

 

 

-

 

 

 

-

 

 

 

326

 

Stock compensation expense

 

-

 

 

 

-

 

 

 

9,349

 

 

 

-

 

 

 

-

 

 

 

9,349

 

Total other comprehensive income

 

-

 

 

 

-

 

 

 

-

 

 

 

448

 

 

 

-

 

 

 

448

 

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(42,713

)

 

 

(42,713

)

Balances at June 30, 2019

 

65,155

 

 

$

65

 

 

$

1,161,115

 

 

$

(1,983

)

 

$

(1,148,609

)

 

$

10,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2018

 

62,862

 

 

$

63

 

 

$

1,131,241

 

 

$

(2,015

)

 

$

(1,066,224

)

 

$

63,065

 

Issuance of common stock upon exercise of stock

   options and restricted stock awards, net

 

831

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

1

 

Issuance of common stock under Employee Stock

   Purchase Plan

 

75

 

 

 

-

 

 

 

407

 

 

 

-

 

 

 

-

 

 

 

407

 

Issuance of common stock, net of issuance costs

 

1,387

 

 

 

2

 

 

 

13,947

 

 

 

-

 

 

 

-

 

 

 

13,949

 

Stock compensation expense

 

-

 

 

 

-

 

 

 

15,519

 

 

 

-

 

 

 

-

 

 

 

15,519

 

Total other comprehensive income

 

-

 

 

 

-

 

 

 

-

 

 

 

32

 

 

 

-

 

 

 

32

 

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(82,385

)

 

 

(82,385

)

Balances at June 30, 2019

 

65,155

 

 

$

65

 

 

$

1,161,115

 

 

$

(1,983

)

 

$

(1,148,609

)

 

$

10,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

Shares

 

 

Par Amount

 

 

Additional

Paid-In Capital

 

 

Accumulated Other

Comprehensive

(Loss) Income

 

 

Accumulated

Deficit

 

 

Total

Stockholders'

Equity

 

Balances at March 31, 2018

 

62,254

 

 

$

62

 

 

$

1,112,321

 

 

$

(213

)

 

$

(946,283

)

 

$

165,887

 

Issuance (withholding) of common stock upon

   exercise of stock options and restricted stock

   awards, net

 

354

 

 

 

1

 

 

 

(124

)

 

 

-

 

 

 

-

 

 

 

(123

)

Stock compensation expense

 

-

 

 

 

-

 

 

 

6,290

 

 

 

-

 

 

 

-

 

 

 

6,290

 

Total other comprehensive loss

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,297

)

 

 

-

 

 

 

(1,297

)

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(39,444

)

 

 

(39,444

)

Balances at June 30, 2018

 

62,608

 

 

$

63

 

 

$

1,118,487

 

 

$

(1,510

)

 

$

(985,727

)

 

$

131,313

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2017

 

61,533

 

 

$

62

 

 

$

1,107,693

 

 

$

(881

)

 

$

(907,325

)

 

$

199,549

 

Issuance (withholding) of common stock upon

   exercise of stock options and restricted stock

   awards, net

 

1,017

 

 

 

1

 

 

 

(550

)

 

 

-

 

 

 

-

 

 

 

(549

)

Issuance of common stock under Employee Stock

   Purchase Plan

 

58

 

 

 

-

 

 

 

255

 

 

 

-

 

 

 

-

 

 

 

255

 

Stock compensation expense

 

-

 

 

 

-

 

 

 

11,089

 

 

 

-

 

 

 

-

 

 

 

11,089

 

Total other comprehensive loss

 

-

 

 

 

-

 

 

 

-

 

 

 

(629

)

 

 

-

 

 

 

(629

)

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(78,402

)

 

 

(78,402

)

Balances at June 30, 2018

 

62,608

 

 

$

63

 

 

$

1,118,487

 

 

$

(1,510

)

 

$

(985,727

)

 

$

131,313

 

 

See accompanying notes.

6


Dynavax Technologies Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Six Months Ended June 30,

 

 

2019

 

 

2018

 

Operating activities

 

 

 

 

 

 

 

Net loss

$

(82,385

)

 

$

(78,402

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

3,196

 

 

 

1,658

 

Amortization of right-of-use assets

 

2,046

 

 

 

-

 

Accretion of discounts on marketable securities

 

(875

)

 

 

(681

)

Stock compensation expense

 

15,519

 

 

 

11,089

 

Cost of sales - amortization of intangible assets

 

4,570

 

 

 

4,715

 

Non-cash interest expense

 

2,135

 

 

 

1,139

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts and other receivables, net

 

(3,878

)

 

 

(450

)

Inventories, net

 

(17,607

)

 

 

(4,800

)

Prepaid expenses and other current assets

 

(643

)

 

 

(186

)

Other assets

 

3,177

 

 

 

(834

)

Accounts payable

 

2,817

 

 

 

1,623

 

Lease liabilities

 

(761

)

 

 

-

 

Accrued liabilities and other liabilities

 

(3,574

)

 

 

1,330

 

Net cash used in operating activities

 

(76,263

)

 

 

(63,799

)

Investing activities

 

 

 

 

 

 

 

Acquisition of technology licenses

 

(7,000

)

 

 

(9,500

)

Purchases of marketable securities

 

(108,341

)

 

 

(186,821

)

Proceeds from maturities of marketable securities

 

99,310

 

 

 

165,450

 

Purchases of property and equipment, net

 

(11,383

)

 

 

(1,639

)

Net cash used in investing activities

 

(27,414

)

 

 

(32,510

)

Financing activities

 

 

 

 

 

 

 

Proceeds from long-term debt, net

 

74,250

 

 

 

99,000

 

Proceeds from issuance of common stock, net

 

13,949

 

 

 

-

 

Proceeds (tax withholding) from exercise of stock options and restricted stock awards, net

 

1

 

 

 

(549

)

Proceeds from Employee Stock Purchase Plan

 

407

 

 

 

255

 

Net cash provided by financing activities

 

88,607

 

 

 

98,706

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(44

)

 

 

(260

)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(15,114

)

 

 

2,137

 

Cash, cash equivalents and restricted cash at beginning of period

 

49,967

 

 

 

27,213

 

Cash, cash equivalents and restricted cash at end of period

$

34,853

 

 

$

29,350

 

Supplemental disclosure of cash flow information