UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934

DYNAVAX TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in charter)

Delaware		000-50577		33-0728374
(State or other jurisdiction of		(Commission File Number)		(I.R.S. Employer
incorporation)				Identification No.)

2929 Seventh Street, Suite 100
Berkeley, California 94710
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (510) 848-5100

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition.

On October 26, 2006, Dynavax Technologies Corporation issued a press release announcing its fiscal 2006 third quarter financial results. A copy of the press release is attached as Exhibit 99.1 to this current report and is incorporated herein by reference.

The information in this current report and in the accompanying exhibit shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this current report and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Dynavax Technologies Corporation, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
99.1		Press release, dated October 26, 2006 entitled “Dynavax Announces Third Quarter 2006 Financial Results and Updates 2006 Financial Guidance.”

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

INDEX TO EXHIBITS

Exhibit Number		Description
99.1		Press release, dated October 26, 2006 entitled “Dynavax Announces Third Quarter 2006 Financial Results and Updates 2006 Financial Guidance.”

Exhibit 99.1

2929 Seventh Street, Suite 100
Berkeley, CA 94710

Contact:
Dynavax Technologies Corporation
Deborah A. Smeltzer
VP Operations & Chief Financial Officer
Phone (650) 665-7222
Email: dsmeltzer@dvax.com

DYNAVAX ANNOUNCES THIRD QUARTER 2006 FINANCIAL RESULTS
AND UPDATES 2006 FINANCIAL GUIDANCE

BERKELEY, Calif. — October 26, 2006 — Dynavax Technologies Corporation (Nasdaq: DVAX) today reported financial results for the third quarter and nine-months ended September 30, 2006.

As of September 30, 2006, Dynavax reported cash, cash equivalents, marketable securities and investments held by Symphony Dynamo, Inc. (SDI) totaling $58.9 million, including $10 million received in the third quarter from AstraZeneca as an upfront payment under the September 2006 asthma and chronic obstructive pulmonary disease (COPD) collaboration agreement. This compares to $75.1 million at December 31, 2005. In addition to the reported cash of $59 million, Dynavax received net proceeds of approximately $29 million from an underwritten public offering in October 2006. Also not reflected in the cash balance is the remaining $30 million funding commitment for SDI programs in cancer, hepatitis B and hepatitis C therapies that is expected to be received in April 2007.

“Three strategic funding initiatives — a public financing, our Symphony Capital deal, and our collaboration with AstraZeneca — have been executed. As a result, we will begin 2007 with approximately $100 million in committed cash earmarked primarily for our product development efforts. Of our 10 pipeline programs, eight are now externally supported. Importantly, the AstraZeneca collaboration is the first of a series of strategic partnerships we expect to selectively execute while continuing to advance those programs and add value for potential partners,” said Dino Dina, MD, president and chief executive officer.

Total revenues were $1.6 million and $2.4 million, respectively, for the three and nine months ended September 30, 2006, compared to $0.4 million and $14.1 million for the same periods in 2005. The reported revenues do not include collaboration funding from SDI of $3.3 million and $5.3 million, respectively, for the three and nine months ended September 30, 2006. Revenues for the third quarter and nine month period of 2006 include collaboration revenue from AstraZeneca, service and license revenue from Dynavax Europe and grant revenue, primarily from the NIH. Revenues for the nine month period of 2005 reflect accelerated recognition of deferred revenue following the end of Dynavax’s collaboration with UCB Farchim.

Set forth at the end of this press release is a reconciliation of GAAP revenues to pro forma revenues. These pro forma amounts are intended to illustrate the Company’s revenues inclusive of collaboration funding for SDI programs. The Company consolidates the financial results of SDI under the applicable accounting guidelines that require the Company to report its collaboration funding related to the SDI programs in the line, “Loss attributed to the noncontrolling interest in SDI.” The collaboration funding

would otherwise have been presented as revenues, as shown in the pro forma revenues, if SDI’s financial results were not consolidated with those of the Company.

Total operating expenses were $17.7 million and $45.4 million, respectively, for the three and nine months ended September 30, 2006 compared to $9.1 million and $27.1 million for the same periods in 2005. Operating expenses included non-cash charges for stock-based compensation, as well as acquired in-process research and development and amortization of intangible assets resulting from the April 2006 Rhein acquisition. Excluding non-cash charges, pro forma operating expenses were $16.5 million and $38.4 million, respectively, for the three and nine months ended September 30, 2006. Set forth at the end of this press release is a reconciliation of GAAP operating expenses to pro forma operating expenses. The higher operating expenses for the third quarter and nine months of 2006 resulted primarily from increased clinical development activities related to the Company’s lead product candidates TOLAMBA™ and HEPLISAV™, the expansion of the Company’s operations to include Dynavax Europe, and reimbursable expenses related to SDI programs as described above.

Net loss for the third quarter was $12.2 million, or $0.40 per share, compared to a net loss of $8.3 million, or $0.33 per share for the same period in 2005. Net loss for the nine months ended September 30, 2006 was $35.6 million, or $1.17 per share, compared to a net loss of $11.8 million, or $0.48 per share for the same period in 2005. The increase in net loss for the quarter and the nine-month period was due primarily to increased clinical development expenditures on the Company’s lead product candidates as well as lower revenues following the termination of the UCB Farchim collaboration in 2005.

     Update on Financial Outlook for 2006

The following statements are forward-looking and are based on current expectations. Actual results may differ materially. Except as expressly set forth below, these statements do not include the potential impact of any equity offerings, business collaborations or other transactions that may be closed or entered into after October 26, 2006.

We anticipate that the Company’s consolidated cash, cash equivalents, marketable securities and investments held by SDI, or total cash, should be in the range of $67 to $71 million at the end of 2006. Not reflected in the projection is the remaining $30 million funding commitment for SDI programs that is expected to be received in April 2007.

We anticipate that total pro forma revenues for 2006 should be in the range of $12 to $16 million deriving from the Company’s existing grants, anticipated service revenue from Dynavax Europe, collaborations and SDI.

We anticipate that total pro forma operating expenses for 2006 should be in the range of $60 to $64 million, driven primarily by costs associated with advancing our clinical programs in ragweed allergy and hepatitis B vaccines and our pre-clinical programs in cancer, hepatitis B and hepatitis C therapies.

      Conference Call and Webcast Today

Dynavax will hold a conference call to discuss these financial results today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The webcast can be accessed on Dynavax Technologies’ website at http://www.dynavax.com under the Investors tab; at www.earnings.com; or via Thomson StreetEvents (www.streetevents.com), a password-protected site. A telephonic replay will be available through November 2, 2006 by dialing 888.286.8010, access code: 6161 2023. International callers can dial +1 617.801.6888, access code: 6161 2023.

About Dynavax

     Dynavax Technologies Corporation discovers, develops, and intends to commercialize innovative TLR9 agonist-based products to treat and prevent allergies, infectious diseases, cancer, and chronic inflammatory diseases using versatile, proprietary approaches that alter immune system responses in highly specific ways. Our TLR9 agonists are based on immunostimulatory sequences, or ISS, which are short DNA sequences that enhance the ability of the immune system to fight disease and control chronic inflammation. Our pipeline includes: TOLAMBA™, a ragweed allergy immunotherapeutic, for which a major safety and efficacy trial (DARTT) is currently underway, and that is in a supportive clinical trial in ragweed allergic children; HEPLISAV™, a hepatitis B vaccine in Phase 3; and a therapy for non-Hodgkin’s lymphoma in Phase 2. Our pre-clinical asthma and COPD programs are partnered with AstraZeneca. Funding for our other preclinical programs in cancer, hepatitis B and hepatitis C therapies, and for an influenza vaccine has been provided by Symphony Dynamo, Inc. and the NIH, but these programs represent future partnering opportunities. For more information, please visit www.dynavax.com.

This press release contains forward-looking statements that are subject to a number of risks and uncertainties, including statements about our updated 2006 financial outlook, cash balance, projected financial results, clinical development plans and timelines, business plans, future operating results, intellectual property position and potential sources of funds. Actual results may differ materially from those set forth in this press release due to the risks and uncertainties inherent in our business, including difficulties or delays in development, achieving the objectives of our collaborative and licensing agreements and obtaining regulatory approval for our products; the scope and validity of patent protection for our products; competition from other companies; our ability to obtain additional financing to support our operations; and other risks detailed in the “Risk Factors” section of our Annual Report on Form 10-K and Quarterly Report on Form 10-Q. We undertake no obligation to revise or update information herein to reflect events or circumstances in the future, even if new information becomes available.

***

DYNAVAX TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Revenues:
Collaboration revenue		$	166			$	—			$	166			$	12,199
Service and license revenue			692				—				916				—
Grant revenue			734				404				1,327				1,856
Total revenues			1,592				404				2,409				14,055
Operating expenses:
Research and development			12,781				6,797				30,135				19,945
General and administrative			4,656				2,319				10,639				7,132
Acquired in-process research and development			—				—				4,180				—
Amortization of intangible assets			251				—				447				—
Total operating expenses			17,688				9,116				45,401				27,077
Loss from operations			(16,096	)			(8,712	)			(42,992	)			(13,022	)
Interest and other income, net			673				428				2,093				1,229
Loss including noncontrolling interest in Symphony Dynamo, Inc.			(15,423	)			(8,284	)			(40,899	)			(11,793	)
Loss attributed to noncontrolling interest in Symphony Dynamo, Inc.			3,271				—				5,302				—
Net loss		$	(12,152	)		$	(8,284	)		$	(35,597	)		$	(11,793	)
Basic and diluted net loss per share		$	(0.40	)		$	(0.33	)		$	(1.17	)		$	(0.48	)
Shares used to compute basic and diluted net loss per share			30,605				24,751				30,551				24,740

DYNAVAX TECHNOLOGIES CORPORATION
RECONCILIATION OF GAAP REVENUES TO PRO FORMA REVENUES
(In thousands)
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
GAAP revenues		$	1,592			$	404			$	2,409			$	14,055
ADD:
Collaboration funding for SDI programs			3,300				—				5,288				—
Pro forma revenues (1)		$	4,892			$	404			$	7,697			$	14,055

DYNAVAX TECHNOLOGIES CORPORATION
RECONCILIATION OF GAAP OPERATING EXPENSES TO PRO FORMA OPERATING EXPENSES
(In thousands)
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
GAAP operating expenses		$	17,688			$	9,116			$	45,401			$	27,077
LESS:
Stock-based compensation expense			970				308				2,366				961
Acquired in-process research and development			—				—				4,180				—
Amortization of intangible assets			251				—				447				—
Pro forma operating expenses		$	16,467			$	8,808			$	38,408			$	26,116

DYNAVAX TECHNOLOGIES CORPORATION
SELECTED BALANCE SHEET DATA
(In thousands)
(Unaudited)

		September 30,				December 31,
		2006				2005
Assets
Cash and cash equivalents and marketable securities (1)		$	58,921			$	75,110
Other current assets			3,410				2,374
Property and equipment, net			4,918				2,197
Goodwill			2,312				—
Other intangible assets, net			4,633				—
Other assets			1,304				412
Total assets		$	75,498			$	80,093
Liabilities, noncontrolling interest and stockholders’ equity
Current liabilities		$	11,465			$	5,543
Deferred revenue and other long-term liabilities			10,135				187
Noncontrolling interest in Symphony Dynamo, Inc.			6,457				—
Stockholders’ equity			47,441				74,363
Total liabilities, noncontrolling interest and stockholders’ equity		$	75,498			$	80,093