View Filing Data

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 27,479	$ 22,453
Marketable securities	34,245	49,701
Accounts receivable	1,139	1,001
Prepaid expenses and other current assets	1,788	1,360
Total current assets	64,651	74,515
Property and equipment, net	6,570	6,404
Goodwill	2,312	2,312
Other intangible assets, net	0	299
Restricted cash	673	652
Other assets	224	67
Total assets	74,430	84,249
Current liabilities:
Accounts payable	1,742	2,329
Accrued liabilities	7,113	10,159
Deferred revenues	1,429	1,429
Total current liabilities	10,284	13,917
Deferred revenues, noncurrent	4,940	5,655
Long-term note payable to Symphony Dynamo Holdings LLC	11,874	10,939
Long-term contingent liability to Symphony Dynamo Holdings LLC	860	843
Other long-term accrued liabilities	642	784
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock: $0.001 par value; 5,000 shares authorized and no shares issued and outstanding at June 30, 2011 and December 31, 2010	0	0
Common stock: $0.001 par value; 250,000 and 150,000 shares authorized at June 30, 2011 and December 31, 2010, respectively; 123,418 and 115,611 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively	123	116
Additional paid-in capital	391,925	369,686
Accumulated other comprehensive loss:
Unrealized gain (loss) on marketable securities available-for-sale	2	(17)
Cumulative translation adjustment	(174)	(729)
Total accumulated other comprehensive loss	(172)	(746)
Accumulated deficit	(346,046)	(316,945)
Total stockholders' equity	45,830	52,111
Total liabilities and stockholders' equity	$ 74,430	$ 84,249

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Operating activities
Net loss	$ (29,101)	$ (37,188)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	704	771
Amortization of intangible assets	299	490
(Gain)/Loss on disposal of assets	(8)	0
Non-cash interest associated with long-term note payable to Symphony Dynamo Holdings LLC	935	798
Fair value adjustment of the warrant and contingent liabilities to Symphony Dynamo Holdings LLC	17	11,134
Accretion and amortization of marketable securities	617	42
Stock-based compensation expense	2,647	966
Changes in operating assets and liabilities:
Accounts receivable	(138)	(454)
Prepaid expenses and other current assets	(428)	(231)
Restricted cash and other assets	(178)	(2,028)
Accounts payable	(587)	(653)
Accrued liabilities and other long term liabilities	(3,188)	7,061
Deferred revenues	(715)	(2,003)
Net cash used in operating activities	(29,124)	(21,295)
Investing activities
Purchases of marketable securities	(19,509)	(28,357)
Proceeds from maturities of marketable securities	34,367	0
Purchases of property and equipment, net	(419)	(39)
Net cash provided (used) by investing activities	14,439	(28,396)
Financing activities
Proceeds from issuance of common stock, net of issuance costs	19,487	42,060
Proceeds from employee stock purchase plan	40	42
Proceeds from exercise of stock options	65	43
Proceeds from exercise of warrants	7	0
Net cash provided by financing activities	19,599	42,145
Effect of exchange rate on cash and cash equivalents	112	(121)
Net increase (decrease) in cash and cash equivalents	5,026	(7,667)
Cash and cash equivalents at beginning of period	22,453	36,720
Cash and cash equivalents at end of period	27,479	29,053
Supplemental disclosure of cash flow information
Disposal of fully depreciated assets	845	0
Net change in unrealized gain on marketable securities	$ 19	$ 10

Available-for-Sale Securities

6 Months Ended

Jun. 30, 2011

Available-for-Sale Securities

3. Available-for-Sale Securities

The following is a summary of available-for-sale securities included in cash and cash equivalents and marketable securities as of June 30, 2011 and December 31, 2010 (in thousands):


	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
June 30, 2011:
Certificates of deposit and money market funds	$	26,607	$	—	$	—		$	26,607
U.S. government agency securities		24,417		4		—			24,421
Corporate debt securities		9,827		—		(2	)		9,825

Total	$	60,851	$	4	$	(2	)	$	60,853

December 31, 2010:
Certificates of deposit and money market funds	$	19,797	$	—	$	—		$	19,797
U.S. Government agency securities		49,056		—		(17	)		49,039
Corporate debt securities		1,764		—		—			1,764

Total	$	70,617	$	—	$	(17	)	$	70,600

There were no realized gains or losses from the sale of marketable securities in the quarters ended June 30, 2011 and 2010. As of June 30, 2011 and December 31, 2010, all of our investments have a stated maturity date that is within one year of the balance sheet date. All of our investments are classified as short-term and available-for-sale, as we may not hold our investments until maturity.

Stockholders' Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity

10. Stockholders’ Equity

As of June 30, 2011, we had four share-based compensation plans: the 2004 Stock Incentive Plan, which includes the 2004 Non-Employee Director Option Program (the “2004 Plan”); the 2004 Employee Stock Purchase Plan; 2010 Employment Inducement Stock Awards Plan (the “2010 Inducement Plan”); and the 2011 Equity Incentive Plan (the “2011 Plan”). The 1997 Equity Incentive Plan (the “1997 Plan”) expired in the first quarter of 2007. Upon expiration of the 1997 Plan, 273,188 shares previously available for grant expired. Prior to the adoption of the 2011 Plan, any outstanding options under the 1997 Plan that are cancelled in future periods will automatically expire and will no longer be available for grant. In January 2011, the Company’s stockholders approved the 2011 Plan. The 2011 Plan provides for the issuance of up to 15,000,000 shares of Dynavax Common Stock to employees and non-employees of the Company and became effective on January 6, 2011. The 2011 Plan is administered by the Company’s Board of Directors (the “Board”), or a designated committee of the Board, and awards granted under the 2011 Plan have a term of 10 years unless earlier terminated by the Board. Upon the effectiveness of the 2011 Plan, no additional awards will be granted under either the 2004 Plan or the 2010 Inducement Plan. As of January 6, 2011, all shares currently subject to awards outstanding under the 1997 Plan, 2004 Plan or 2010 Inducement Plan that expire or are forfeited will be included in the reserve for the 2011 Plan to the extent such shares would otherwise return to such plans.

Under our stock-based compensation plans, option awards generally vest over a 4-year period contingent upon continuous service and expire 10 years from the date of grant (or earlier upon termination of continuous service). The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model and the following weighted-average assumptions:


	Employee Stock Options												Employee Stock Purchase Plan
	Three Months Ended June 30,						Six Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010			2011			2010
Weighted-average fair value per share	$	2.30		$	1.35		$	2.78		$	1.40		$	2.52		$	1.54
Risk-free interest rate		1.3	%		2.1	%		1.6	%		2.0	%		0.52	%		0.4	%
Expected life (in years)		4.0			4.0			4.0			4.0			1.2			0.6
Volatility		1.6			1.6			1.6			1.6			1.6			1.6
Expected dividends		—			—			—			—			—			—

Expected volatility is based on historical volatility of our stock and comparable peer data. The expected life of options granted is estimated based on historical option exercise and employee termination data. Executive level employees, who hold a majority of the options outstanding, and non-executive level employees were grouped and considered separately for valuation purposes. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is 0% for all years and is based on our history and expectation of dividend payouts.

Compensation expense is based on awards ultimately expected to vest and reflects estimated forfeitures. For equity awards with time-based vesting, the fair value is amortized to expense on a straight-line basis over the vesting periods. For equity awards with performance-based vesting criteria, the fair value begins to be amortized to expense when the achievement of the vesting criteria becomes probable. As of June 30, 2011, the total unrecognized compensation cost related to non-vested equity awards amounted to $10.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.3 years and one year for options and restricted stock units, respectively.

We recognized the following amounts of stock-based compensation expense (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Employee and director stock-based compensation expense	$	1,167	$	418	$	2,647	$	933
Other stock-based compensation expense		—		7		—		33

Total	$	1,167	$	425	$	2,647	$	966


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Research and development expense	$	531	$	148	$	1,043	$	89
General and administrative expense		636		277		1,604		877

Total	$	1,167	$	425	$	2,647	$	966

Activity under the stock option plans was as follows:


	Options and Awards Available for Grant			Number of Options Outstanding			Weighted-Average Price Per Share
Balance at December 31, 2010		646,392			6,868,037		$	3.05
2011 Plan options authorized		15,000,000			—			—
Options granted		(4,259,400	)		4,259,400		$	3.10
Options exercised		—			(45,250	)	$	1.34
Options cancelled:
Options forfeited (unvested)		230,075			(230,075	)	$	1.82
Options expired (vested)		13,704			(13,704	)	$	2.92
Awards cancelled (unvested)		—			—			—

Balance at June 30, 2011		11,630,771			10,838,408		$	3.10

The following table summarizes outstanding options that are net of expected forfeitures (vested and expected to vest) and options exercisable under our stock option plans as of June 30, 2011:


	Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding options (vested and expected to vest)		9,670,324	$	3.16		7.55	$	4,526,905
Options exercisable		3,973,869	$	4.08		5.27	$	1,675,235

Employee Stock Purchase Plan

As of June 30, 2011, 996,000 shares were reserved and approved for issuance under the Employee Stock Purchase Plan (the “Purchase Plan”), subject to adjustment for a stock split, any future stock dividend or other similar change in our common stock or capital structure. To date, employees have acquired 508,876 shares of our common stock under the Purchase Plan. At June 30, 2011, 487,124 shares of our common stock remained available for future purchases.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

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+ Details

Net Loss Per Share

6 Months Ended

Jun. 30, 2011

Net Loss Per Share

8. Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period and dilutive potential common shares using the treasury-stock method. For purposes of this calculation, common stock subject to repurchase by us, options, restricted stock units and warrants are considered to be potential common shares and are only included in the calculation of diluted net loss per share when their effect is dilutive. Outstanding warrants and equity awards to purchase 37.0 million and 32.6 million shares of common stock as of June 30, 2011 and 2010, respectively, were excluded from the calculation of diluted net loss per share for the quarters ended June 30, 2011 and 2010 because the effect would have been anti-dilutive.

Comprehensive Loss

6 Months Ended

Jun. 30, 2011

Comprehensive Loss

9. Comprehensive Loss

Comprehensive loss is comprised of net loss and other comprehensive income or loss. Other comprehensive income or loss includes certain changes in stockholders’ equity not included in net loss. Comprehensive loss is as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net loss	$	(10,635	)	$	(28,004	)	$	(29,101	)	$	(37,188	)
Increase (decrease) in unrealized gain on marketable securities available-for-sale		(7	)		10			19			10
Increase (decrease) in cumulative translation adjustment		150			(604	)		555			(1,052	)

Comprehensive loss	$	(10,492	)	$	(28,598	)	$	(28,527	)	$	(38,230	)

- Definition

The entire disclosure for comprehensive income. Includes, but is not limited to, the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains (losses) on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains (losses) on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains (losses) on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain (loss) and net prior service cost or credit for pension plans and other postretirement benefit plans.

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+ Details

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2011	Jul. 28, 2011
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Trading Symbol	DVAX
Entity Registrant Name	DYNAVAX TECHNOLOGIES CORP
Entity Central Index Key	0001029142
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		123,418,023

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2011	Dec. 31, 2010
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000	150,000
Common stock, shares issued	123,418	115,611
Common stock, shares outstanding	123,418	115,611

Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements

2. Fair Value Measurements

FASB Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

•

Level 1—Quoted prices in active markets for identical assets or liabilities;

•

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table represents the fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 (in thousands):


June 30, 2011	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	25,769	$	—	$	—	$	25,769
U.S. government agency securities		—		24,421		—		24,421
Corporate debt securities		—		9,825		—		9,825

Total assets	$	25,769	$	34,246	$	—	$	60,015

Liabilities:
Long-term contingent liability to Symphony Dynamo Holdings LLC	$	—	$	—	$	860	$	860

Total liabilities	$	—	$	—	$	860	$	860


December 31, 2010	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	18,980	$	—	$	—	$	18,980
U.S. government agency securities		—		49,039		—		49,039
Corporate debt securities		—		1,764		—		1,764

Total assets	$	18,980	$	50,803	$	—	$	69,783

Liabilities:
Long-term contingent consideration liability to Holdings	$	—	$	—	$	843	$	843

Total liabilities	$	—	$	—	$	843	$	843

Assets

Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

Marketable securities are primarily comprised of U.S. government sponsored and corporate debt securities which are measured at fair value using Level 2 inputs. We review trading activity and pricing for these investments as of the measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.

When determining if there are any “other-than-temporary” impairments on our investments, we evaluate: (i) whether the investment has been in a continuous realized loss position for over twelve months, (ii) the duration to maturity of our investments, (iii) our intention to hold the investments to maturity and if it is more likely than not that we will be required to sell the investment before recovery of the amortized cost bases, (iv) the credit rating of each investment, and (v) the type of investments made. Through June 30, 2011, we have not recognized any “other-than-temporary” losses on our investments. There were no sales of marketable securities during the quarters ended June 30, 2011 and 2010.

Liabilities

In connection with our acquisition of SDI in December 2009, we are obligated to make future contingent cash payments to the former Symphony Dynamo Holdings LLC (“Holding”) shareholders related to certain payments received by us, if any, from future partnering agreements pertaining to our hepatitis C and cancer therapy programs. We estimated the fair value of this contingent liability using a discounted cash flow model. The discounted cash flow model was derived from management’s assumptions regarding the timing, amounts and probability of potential upfront and milestone payments for the development and/or commercialization of the hepatitis C program based on transactions for similar stage programs by other companies. These cash flows were discounted at a 15% rate at June 30, 2011.

Changes in the fair value of the contingent liability are recognized in Other income (expense) in the statement of operations in the period of the change. Certain events including, but not limited to, the timing and terms of any strategic partnership agreement related to the hepatitis C therapy program could have a material impact on the fair value of the contingent liability, and as a result, our results of operations and financial position. Based on our assumptions regarding our beta and risk free interest rate used in the discounted cash flow model, the change in fair value of the contingent liability resulted in other expense of $17 thousand for the six months ended June 30, 2011.

The following table represents a reconciliation of the change in the fair value measurement of the contingent liability for the six months ended June 30, 2011 (in thousands):


Contingent Liability to Holdings	Amount
Fair value measurement at December 31, 2010	$	843
Adjustment to fair value measurement		17

Balance as of June 30, 2011	$	860

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-Paragraph 3, 10, 14, 15
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues:
Collaboration revenue	$ 6,363	$ 1,341	$ 6,729	$ 8,762
Grant revenue	890	617	1,779	1,479
Service and license revenue	16	233	505	294
Total revenues	7,269	2,191	9,013	10,535
Operating expenses:
Research and development	13,257	14,045	27,929	26,525
General and administrative	4,054	4,173	8,808	8,743
Amortization of intangible assets	54	245	299	490
Total operating expenses	17,365	18,463	37,036	35,758
Loss from operations	(10,096)	(16,272)	(28,023)	(25,223)
Interest income	23	39	56	41
Interest expense	(487)	(431)	(977)	(830)
Other income (expense)	(75)	(11,340)	(157)	(11,176)
Net loss	$ (10,635)	$ (28,004)	$ (29,101)	$ (37,188)
Basic and diluted net loss per share	$ (0.09)	$ (0.34)	$ (0.25)	$ (0.54)
Shares used to compute basic and diluted net loss per share	117,864	82,012	116,801	68,264

Intangible Assets

6 Months Ended

Jun. 30, 2011

Intangible Assets

4. Intangible Assets

Intangible assets consist primarily of a manufacturing process and customer relationships. The manufacturing process intangible derives from the methods for making proteins in Hansenula yeast, which is a key component in the production of hepatitis B vaccine. The customer relationships derive from Rhein’s ability to sell existing, in-process and future products to its existing customers. Purchased intangible assets other than goodwill are amortized on a straight-line basis over their respective useful lives. The following table presents details of the purchased intangible assets, which were fully amortized at June 30, 2011 (in thousands, except years):


	Original Estimated Useful Life (in Years)		Gross		Accumulated Amortization			Net
Manufacturing process		5	$	3,670	$	(3,670	)	$	—
Customer relationships		5		1,230		(1,230	)		—

Total		5	$	4,900	$	(4,900	)	$	—

Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies

6. Commitments and Contingencies

We lease our facilities in Berkeley, California, or the Berkeley Lease, and Düsseldorf, Germany, or the Düsseldorf Lease, under operating leases that expire in September 2017 and March 2023, respectively. The Berkeley Lease provides for periods of escalating rent. The total cash payments over the life of the lease are divided by the total number of months in the lease period and the average rent is charged to expense each month during the lease period. We entered into sublease agreements under the Düsseldorf Lease for a certain portion of the leased space. The sublease income is offset against our rent expense. Total net rent expense related to our operating leases for the six months ended June 30, 2011 and 2010 was $0.9 million and $1.2 million, respectively. Deferred rent was $0.6 million as of June 30, 2011.

Future minimum payments under the non-cancelable portion of our operating leases at June 30, 2011, excluding payments from the sublease agreements, are as follows (in thousands):


Year ending December 31,
2011 (remaining six months)	$	916
2012		1,855
2013		1,873
2014		1,828
Thereafter		8,592

Total	$	15,064

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 June 30, 2011 and is collateralized by a certificate of deposit which has been included in restricted cash in the consolidated balance sheets as of June 30, 2011 and December 31, 2010. 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.

We established a letter of credit with Deutsche Bank as security for our Düsseldorf Lease in the amount of $0.3 million. The letter of credit remained outstanding as of June 30, 2011 and is collateralized by a certificate of deposit which has been included in restricted cash in the consolidated balance sheet as of June 30, 2011 and December 31, 2010.

As part of the consideration transferred from Dynavax to Holdings for the acquisition of SDI, we are 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 $0.9 million as of June 30, 2011.

In connection with the exercise of our purchase of all of the outstanding equity of SDI on December 30, 2009, we issued a note to Holdings in the principal amount of $15 million. We estimated the fair value of the non-interest bearing note payable to Holdings using a net present value model using a discount rate of 17%. Imputed interest will be recorded as interest expense over the term of the loan. The principal amount of $15 million is due on December 31, 2012 and is payable in cash, our common stock or a combination thereof at our discretion. If we elect to pay the note in shares of our common stock, the number of shares issued will be determined by our stock price at the date of payment.

In addition to the non-cancelable commitments included above, we have entered into contractual arrangements that obligate us to make payments to the contractual counterparties upon the occurrence of future events. In the normal course of operations, we have entered into license and other agreements and intend to continue to seek additional rights relating to compounds or technologies in connection with our discovery, manufacturing and development programs. Under the terms of the agreements, we may be required to pay future up-front fees, milestones and royalties on net sales of products originating from the licensed technologies. We consider these potential obligations to be contingent and have summarized all significant arrangements below.

We rely on research institutions, contract research organizations, clinical investigators and clinical material manufacturers. As of June 30, 2011, under the terms of our agreements, we are obligated to make future payments as services are provided of approximately $12.3 million through 2015. These agreements are terminable by us upon written notice. We are generally only liable for actual effort expended by the organizations at any point in time during the contract through the notice period.

Under the terms of our exclusive license agreements with the Regents of the University of California, as amended, for certain technology and related patent rights and materials, we pay annual license or maintenance fees and will be required to pay milestones and royalties on net sales of products originating from the licensed technologies.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Topic 825
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+ Details

Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Dynavax Technologies Corporation (“Dynavax” or the “Company”), a clinical-stage biopharmaceutical company, discovers and develops novel products to prevent and treat infectious and inflammatory diseases. Our lead product candidate is HEPLISAV^TM, a Phase 3 investigational adult hepatitis B vaccine designed to provide rapid and superior protection with fewer doses than current licensed vaccines.

Our pipeline of product candidates includes: HEPLISAV; clinical-stage programs for our Universal Flu vaccine, autoimmune program partnered with GlaxoSmithKline (“GSK”) and hepatitis C and hepatitis B therapies; and a preclinical program partnered with AstraZeneca AB (“AstraZeneca”). We compete with pharmaceutical companies, biotechnology companies, academic institutions and research organizations in developing therapies to prevent or treat infectious and inflammatory diseases. Our product candidates are based on the use of immunostimulatory and immunoregulatory sequences. We originally incorporated in California on August 29, 1996 under the name Double Helix Corporation, and we changed our name to Dynavax Technologies Corporation in September 1996. We reincorporated in Delaware on March 26, 2001.

Basis of Presentation

Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. In our opinion, these unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which we consider necessary to fairly state our financial position and the results of our operations and cash flows. Interim-period results are not necessarily indicative of results of operations or cash flows for a full-year period or any other interim-period. The condensed consolidated balance sheet at December 31, 2010 has been derived from audited financial statements at that date, but does not include all disclosures required by GAAP for complete financial statements.

The unaudited condensed consolidated financial statements and these notes should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange Commission (the “SEC”).

The unaudited condensed consolidated financial statements include the accounts of Dynavax and our wholly-owned subsidiaries, Rhein Biotech GmbH (“Rhein” or “Dynavax Europe”) and Symphony Dynamo, Inc. (“SDI”). All significant intercompany accounts and transactions have been eliminated. We have reclassified the prior year deferred rent balance from current accrued liabilities to other long-term in order to conform to the current year presentation. We operate in one business segment, which is the discovery and development of biopharmaceutical products.

Liquidity and Financial Condition

We have incurred significant operating losses and negative cash flows from operations since our inception. As of June 30, 2011, we had cash, cash equivalents and marketable securities of $61.7 million, restricted cash of $0.7 million and working capital of $54.4 million. We currently estimate that we have sufficient cash resources to meet our anticipated cash needs through the next twelve months based on cash and cash equivalents and marketable securities on hand at June 30, 2011, anticipated revenues from existing agreements and the funding available to us under the September 2010 Common Stock Purchase Agreement (the “Purchase Agreement”) with Aspire Capital Fund, LLC (“Aspire Capital”).

In order to continue development of our product candidates, particularly HEPLISAV, we will need to raise additional funds. This may occur through our Purchase Agreement with Aspire Capital, future public or private financings, and/or strategic alliance and licensing arrangements. Sufficient funding may not be available on acceptable terms or at all. Additional equity financings, if completed, could result in significant dilution or otherwise adversely affect the rights of existing stockholders. If adequate funds are not available in the future, we would need to delay, reduce the scope of, or put on hold the HEPLISAV program or our other development programs while we seek strategic alternatives.

The accompanying financial statements have been prepared assuming we will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results may differ from these estimates.

Significant Accounting Policies

We believe that there have been no substantive changes in our significant accounting policies during the six months ended June 30, 2011 as compared with those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010 other than the changes to our accounting policies related to revenue recognition as discussed below.

Revenue Recognition

Our revenues are derived from collaborative and service agreements as well as grants. We enter into license and manufacturing agreements and collaborative research and development arrangements with pharmaceutical and biotechnology partners that may involve multiple deliverables. Our arrangements may include one or more of the following elements: upfront license payments, cost reimbursement for the performance of research and development, milestone payments, other contingent payments, contract manufacturing service fees, royalties and license fees. Each deliverable in the arrangement is evaluated to determine whether it meets the criteria to be accounted for as a separate unit of accounting or whether it should be combined with other deliverables. We recognize revenue when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured.

On January 1, 2011, we adopted on a prospective basis Accounting Standards Update (ASU) 2009-13, “Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”) which amends the criteria related to identifying separate units of accounting and provides guidance on whether multiple deliverables exist, how an arrangement should be separated and the consideration allocated. The adoption of the standard did not impact our financial position or results of operations as of and for the six months ended June 30, 2011 as we did not enter into or materially modify any multiple-element arrangements during that period. The adoption of this standard may result in revenue recognition patterns for future agreements that are different from those recognized for our existing multiple-element arrangements.

Non-refundable upfront fees received for license and collaborative agreements entered into prior to January 1, 2011 are deferred and recognized over our expected performance period. Revenue is recognized on a ratable basis, unless we determine that another methodology is more appropriate, through the date at which our performance obligations are completed. Management makes its best estimate of the period over which we expect to fulfill our performance obligations, which may include clinical development activities. Given the uncertainties of research and development collaborations, significant judgment is required to determine the duration of the performance period. We recognize cost reimbursement revenue under collaborative agreements as the related research and development costs are incurred, as provided for under the terms of these agreements.

On January 1, 2011, we elected to prospectively adopt ASU 2010-17, “Milestone Method of Revenue Recognition” (“ASU 2010-17”). Under the milestone method, contingent consideration received from the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity’s performance or on the occurrence of a specific outcome resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and (iii) that would result in additional payments being due to the entity. A milestone does not include events for which the occurrence is contingent solely on the passage of time or solely on a collaboration partner’s performance. A milestone is substantive if the consideration earned from the achievement of the milestone is consistent with our performance required to achieve the milestone or the increase in value to the collaboration resulting from our performance, relates solely to our past performance, and is reasonable relative to all of the other deliverables and payments within the arrangement.

Our license and collaboration agreements with our partners provide for payments to us upon the achievement of development milestones. Given the challenges inherent in developing biologic products, there was substantial uncertainty whether any such milestones would be achieved at the time we entered into these agreements. In addition, we evaluated whether the development milestones met the remaining criteria to be considered substantive. As a result of our analysis, we consider our development milestones to be substantive and, accordingly, we expect to recognize as revenue future payments received from such milestones as we achieve each milestone. The election to adopt the milestone method did not impact our financial position or results of operations as of and for the six months ended June 30, 2011.

Milestone payments that were contingent upon the achievement of substantive at-risk performance criteria were recognized on a ratable basis through the date at which our performance obligations were completed. All revenue recognized to date under our collaborative agreements has been nonrefundable.

Our license and collaboration agreements with certain partners also provide for contingent payments to us based solely upon the performance of our partner. For such contingent payments we expect to recognize the payments as revenue upon receipt, provided that collection is reasonably assured and the other revenue recognition criteria have been satisfied.

Revenues from manufacturing services are recognized upon meeting the criteria for substantial performance and acceptance by the customer.

Revenue from royalty payments is contingent on future sales activities by our licensees. As a result, we recognize royalty revenue when reported by our licensees and when collection is reasonably assured.

Revenue from government and private agency grants are recognized as the related research expenses are incurred and to the extent that funding is approved. Additionally, we recognize revenue based on the facilities and administrative cost rate reimbursable per the terms of the grant awards.

Recent Accounting Pronouncements

Accounting Standards Update 2010-17

In March 2010, the Financial Accounting Standards Board (“FASB”) reached a consensus on Accounting Standards Update (“ASU”) No. 2010-17, “Milestone Method of Revenue Recognition” (“ASU 2010-17”). ASU 2010-17 provides guidance on applying the milestone method to milestone payments for achieving specified performance measures when those payments are related to uncertain future events. Under the consensus, entities can make an accounting policy election to use the milestone method and recognize arrangement consideration received for achieving specified performance measures during the period in which the milestones are achieved, provided certain criteria are met. The scope of this issue is limited to transactions involving research or development. This new guidance was effective for fiscal years beginning on or after June 15, 2010, and we adopted it prospectively as of January 1, 2011 such that it is applicable to milestones under existing agreements achieved after that date. The adoption of this standard did not have a material impact on our financial position or results of operations.

Accounting Standards Update 2009-13

In October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”). ASU 2009-13 eliminates the requirement to establish the fair value of undelivered products and services in order to treat deliverables in an arrangement as separate units of accounting and provides for separate revenue recognition based upon management’s estimate of the relative selling price for each deliverable in an arrangement. This new guidance was effective for fiscal years beginning on or after June 15, 2010, and we adopted it prospectively as of January 1, 2011 such that it is applicable to revenue arrangements entered into or materially modified on or after that date. Although the adoption of this standard did not have a material impact on our financial position and results of operations, this standard may impact us in the future in the event we enter into new collaboration arrangements or modify existing collaborative relationships.

- Definition

The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References + Details

Financing Agreements

6 Months Ended

Jun. 30, 2011

Financing Agreements

5. Financing Agreements

On September 20, 2010, we entered into a Purchase Agreement with Aspire Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $30.0 million of shares of Dynavax common stock over the 25-month term of the Purchase Agreement. Under the Purchase Agreement, we agreed to pay Aspire Capital a commitment fee equal to 4% of $30.0 million in consideration for Aspire Capital’s obligation to purchase up to $30.0 million of Dynavax common stock. We paid this commitment fee of $1.2 million by the issuance of 600,000 shares of our common stock and this fee was recorded as a cost of raising capital and netted against the gross proceeds from the Purchase Agreement in September 2010. Upon execution of the Purchase Agreement, we sold 1,000,000 shares of common stock to Aspire Capital at a purchase price of $2.00 per share, for an aggregate purchase price of $2.0 million.

Pursuant to the Purchase Agreement, on any business day on which the closing sale price of our common stock exceeds $1.00, over the 25-month term of the Purchase Agreement, we have the right, in our sole discretion, to present Aspire Capital with a purchase notice directing Aspire Capital to purchase up to 150,000 Purchase Shares per business day (defined in the Purchase Agreement as any day on which the principal market is open for trading including any day on which the principal market is open for trading for a period of time less than the customary time). We and Aspire Capital may mutually agree to increase the number of shares that may be sold per business day to as much as an additional 1,000,000 Purchase Shares per business day. The purchase price per Purchase Share is the lower of (i) the lowest sale price for the common stock on the date of sale or (ii) the arithmetic average of the three lowest closing sale prices for the common stock during the 12 consecutive business days ending on the business day immediately preceding the purchase date of those securities. During the six months ended June 30, 2011, we sold through Aspire Capital an aggregate of 7,700,000 shares of common stock for net proceeds of $19.5 million. As of June 30, 2011, we could offer and sell from time to time through Aspire Capital up to an additional $7.2 million in aggregate offering proceeds of our common stock under the Purchase Agreement.

Collaborative Research and Development Agreements

6 Months Ended

Jun. 30, 2011

Collaborative Research and Development Agreements

7. Collaborative Research and Development Agreements

GlaxoSmithKline

In December 2008, we entered into a worldwide strategic alliance with GSK to discover, develop, and commercialize toll-like receptor (“TLR”) inhibitors for diseases such as lupus, psoriasis and rheumatoid arthritis. We received an initial payment of $10 million and agreed to conduct research and early clinical development in up to four programs. We are eligible to receive potential contingent development payments which we have determined to be substantive milestones. During the quarter ended June 30, 2011, we received a milestone payment of $6.0 million for the initiation of a Phase 1 clinical trial. GSK can exercise its exclusive option to license each program upon achievement of proof-of-concept or earlier upon certain circumstances, and we are eligible to receive contingent option exercise payments. If GSK exercises its option, GSK would carry out further development and commercialization of these products. We are eligible to receive tiered, up to double-digit royalties on sales, if any, and have retained an option to co-develop and co-promote one product under this agreement.

Revenue from the initial payment is deferred and is being recognized over the expected period of performance which is estimated to be seven years. For the six months ended June 30, 2011 and 2010, we recognized revenue of $0.7 million in each year related to the initial payment and, as of June 30, 2011, deferred revenue of $6.4 million relates to the initial payment. Revenue from the milestone payment of $6 million was recorded as revenue during the quarter ended June 30, 2011.

AstraZeneca

In September 2006, we entered into a three-year research collaboration and license agreement with AstraZeneca for the discovery and development of TLR9 agonist-based therapies for the treatment of asthma and chronic obstructive pulmonary disease. The research term of this agreement was extended through July 2010. The collaboration is using our proprietary second-generation TLR9 agonist immunostimulatory sequences (“ISS”). AstraZeneca has the right to sublicense its rights upon our prior consent. We have the option to co-promote in the United States products arising from the collaboration, if any. We received an upfront payment of $10 million, a milestone payment of $4.5 million for the nomination of a candidate drug, and are eligible to receive potential future development milestones. Upon commercialization, we are also eligible to receive royalties based on product sales, if any.

Revenue from the upfront payment had been deferred until we amended certain indemnification obligations in our agreement with AstraZeneca which allowed for the upfront payment to be fully recognized as collaboration revenue in the third quarter of 2010. Revenue from the milestone payment was deferred and recognized ratably over the estimated research period through July 2010. Revenues from this agreement were immaterial for 2011. For the six months ended June 30, 2010, we recognized revenue of $0.8 million related to the milestone for the nomination of a candidate drug and $3.3 million from the performance of research services.

National Institutes of Health and Other Funding

In September 2008, we were awarded a five-year $17 million contract to develop our ISS technology using TLR9 agonists as vaccine adjuvants. The contract was awarded by the National Institutes of Health’s (“NIH”) National Institute of Allergy and Infectious Diseases (NIAID) to develop novel vaccine adjuvant candidates that signal through receptors of the innate immune system. The contract supports adjuvant development for anthrax as well as other disease models. NIAID is funding 100% of the total $17 million cost of Dynavax’s program under Contract No. HHSN272200800038C. For the six months ended June 30, 2011 and 2010, we recognized revenue of approximately $1.1 million in each year related to this contract.

In August 2010, we awarded a grant from the NIH’s NIAID to take a systems biology approach to study the differences between individuals that do or do not respond to vaccination against the HBV. This study will be one of several projects covered in a five-year, $17.6 million grant to the Baylor Institute of Immunology Research in Dallas as part of the Human Immune Phenotyping Centers program. For the six months ended June 30, 2011, we recognized revenue of approximately $0.4 million related to this grant.

In July 2010, we were awarded a $0.6 million grant from the NIH to explore the feasibility of developing a universal vaccine to prevent infection by human papilloma virus (HPV). For the six months ended June 30, 2011 we recognized revenue of approximately $0.1 million related to this grant.

In July 2008, we were awarded a two-year $1.8 million grant from the NIH to develop a therapy for systemic lupus erythematosus (SLE), an autoimmune disease. For the six months ended June 30, 2011 and 2010, we recognized revenue of approximately $57 thousand and $0.2 million respectively.