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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, 2020  

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 3, 2020, the registrant had outstanding 109,511,602 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, 2020 and December 31, 2019

4

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019

5

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019

5

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019

6

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019

7

 

Notes to Condensed Consolidated Financial Statements

8

Item 2.

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

23

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

30

Item 4.

Controls and Procedures

30

 

PART II OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

49

Item 5.

Other Information

49

Item 6.

Exhibits

50

 

SIGNATURES

52

 

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 the direct and indirect impact of the ongoing COVID-19 global pandemic on our business and operations, including sales of HEPLISAV-B®, our ability to successfully commercialize HEPLISAV-B, our anticipated market opportunity and level of sales of HEPLISAV-B, our ability to manufacture sufficient supply of HEPLISAV-B to meet future demand, our business, collaboration and regulatory strategy, our ability to successfully develop and commercialize other vaccines containing our novel adjuvant CpG 1018, including any potential vaccine for COVID-19, our ability to manufacture sufficient supply of CpG 1018 to meet potential future demand in connection with new vaccines, including any potential COVID-19 vaccine, and to meet regulatory requirements, 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,

 

 

2020

 

 

2019

 

 

(unaudited)

 

 

(Note 1)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

60,485

 

 

$

39,884

 

Marketable securities available-for-sale

 

140,223

 

 

 

111,171

 

Accounts and other receivables, net

 

903

 

 

 

8,886

 

Inventories, net

 

54,392

 

 

 

41,332

 

Prepaid expenses and other current assets

 

9,463

 

 

 

7,380

 

Total current assets

 

265,466

 

 

 

208,653

 

Property and equipment, net

 

30,476

 

 

 

32,022

 

Intangible assets, net

 

-

 

 

 

2,500

 

Operating lease right-of-use assets

 

27,871

 

 

 

30,252

 

Goodwill

 

2,103

 

 

 

2,081

 

Restricted cash

 

217

 

 

 

216

 

Other assets

 

3,181

 

 

 

3,344

 

Total assets

$

329,314

 

 

$

279,068

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

2,695

 

 

$

9,278

 

Accrued research and development

 

2,396

 

 

 

4,120

 

Accrued liabilities

 

13,181

 

 

 

14,802

 

Warrant liability

 

31,905

 

 

 

14,860

 

Other current liabilities

 

3,045

 

 

 

9,987

 

Total current liabilities

 

53,222

 

 

 

53,047

 

Long-term debt, net of debt discount of $1,248 and $1,394 at June 30, 2020 and December

   31, 2019, respectively

 

179,656

 

 

 

178,601

 

Long-term portion of lease liabilities

 

36,231

 

 

 

37,845

 

Other long-term liabilities

 

1,910

 

 

 

1,285

 

Total liabilities

 

271,019

 

 

 

270,778

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock: $0.001 par value

 

 

 

 

 

 

 

Authorized: 5,000 shares; Issued and outstanding:

 

-

 

 

 

-

 

Series B Convertible Preferred stock  ̶  4 shares and 5 shares at June 30, 2020 and

   December 31, 2019, respectively

 

-

 

 

 

-

 

Common stock: $0.001 par value; 278,000 shares and 139,000 shares authorized at

   June 30, 2020 and December 31, 2019, respectively; 109,503 shares and 83,871

   shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

109

 

 

 

84

 

Additional paid-in capital

 

1,343,279

 

 

 

1,229,417

 

Accumulated other comprehensive loss

 

(2,095

)

 

 

(2,387

)

Accumulated deficit

 

(1,282,998

)

 

 

(1,218,824

)

Total stockholders’ equity

 

58,295

 

 

 

8,290

 

Total liabilities and stockholders’ equity

$

329,314

 

 

$

279,068

 

 

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,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue, net

$

2,405

 

 

$

8,301

 

 

$

12,919

 

 

$

13,928

 

Other revenue

 

263

 

 

 

-

 

 

 

668

 

 

 

146

 

Total revenues

 

2,668

 

 

 

8,301

 

 

 

13,587

 

 

 

14,074

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales - product

 

967

 

 

 

2,141

 

 

 

3,321

 

 

 

3,941

 

Cost of sales - amortization of intangible assets

 

202

 

 

 

2,297

 

 

 

2,500

 

 

 

4,570

 

Research and development

 

5,884

 

 

 

16,196

 

 

 

10,537

 

 

 

37,402

 

Selling, general and administrative

 

18,954

 

 

 

17,861

 

 

 

39,880

 

 

 

36,209

 

Restructuring

 

-

 

 

 

8,777

 

 

 

-

 

 

 

8,777

 

Total operating expenses

 

26,007

 

 

 

47,272

 

 

 

56,238

 

 

 

90,899

 

Loss from operations

 

(23,339

)

 

 

(38,971

)

 

 

(42,651

)

 

 

(76,825

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

331

 

 

 

979

 

 

 

921

 

 

 

1,714

 

Interest expense

 

(4,732

)

 

 

(4,598

)

 

 

(9,463

)

 

 

(7,332

)

Sublease income

 

1,927

 

 

 

-

 

 

 

3,853

 

 

 

-

 

Change in fair value of warrant liability (Note 11)

 

(25,655

)

 

 

-

 

 

 

(17,045

)

 

 

-

 

Other

 

(111

)

 

 

(123

)

 

 

211

 

 

 

58

 

Net loss

 

(51,579

)

 

 

(42,713

)

 

 

(64,174

)

 

 

(82,385

)

Basic and diluted net loss per share

$

(0.53

)

 

$

(0.66

)

 

$

(0.70

)

 

$

(1.28

)

Weighted average shares used to compute basic and diluted net

   loss per share

 

97,339

 

 

 

65,088

 

 

 

91,408

 

 

 

64,436

 

 

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

$

(51,579

)

 

$

(42,713

)

 

$

(64,174

)

 

$

(82,385

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities available-for-sale

 

(99

)

 

 

108

 

 

 

192

 

 

 

176

 

Foreign currency translation adjustments

 

579

 

 

 

340

 

 

 

100

 

 

 

(144

)

Total other comprehensive income

 

480

 

 

 

448

 

 

 

292

 

 

 

32

 

Total comprehensive loss

$

(51,099

)

 

$

(42,265

)

 

$

(63,882

)

 

$

(82,353

)

 

See accompanying notes.

5


Dynavax Technologies Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

Common Stock

 

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2020

Shares

 

 

Par Amount

 

 

Shares

 

 

Par Amount

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

(Loss) Income

 

 

Accumulated

Deficit

 

 

Total

Stockholders'

Equity

 

Balances at March 31, 2020

 

87,599

 

 

$

88

 

 

 

5

 

 

$

-

 

 

$

1,245,730

 

 

$

(2,575

)

 

$

(1,231,419

)

 

$

11,824

 

Conversion of preferred stock

 

700

 

 

 

1

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

Issuance (withholding) of common

   stock upon exercise of stock options

   and restricted stock awards, net

 

7

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14

 

 

 

-

 

 

 

-

 

 

 

14

 

Issuance of common stock, net of

   issuance costs, in conjunction

   with an underwritten public

   offering and an At Market

   Sales Agreement (see Note 11)

 

21,197

 

 

 

20

 

 

 

-

 

 

 

-

 

 

 

93,447

 

 

 

-

 

 

 

-

 

 

 

93,467

 

Stock compensation expense

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,088

 

 

 

-

 

 

 

-

 

 

 

4,088

 

Total other comprehensive income

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

480

 

 

 

-

 

 

 

480

 

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(51,579

)

 

 

(51,579

)

Balances at June 30, 2020

 

109,503

 

 

$

109

 

 

 

4

 

 

$

-

 

 

$

1,343,279

 

 

$

(2,095

)

 

$

(1,282,998

)

 

$

58,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2019

 

83,871

 

 

$

84

 

 

 

5

 

 

$

-

 

 

$

1,229,417

 

 

$

(2,387

)

 

$

(1,218,824

)

 

$

8,290

 

Conversion of preferred stock

 

700

 

 

 

1

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

Issuance (withholding) of common

   stock upon exercise of stock options

   and restricted stock awards, net

 

735

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

12

 

 

 

-

 

 

 

-

 

 

 

13

 

Issuance of common stock under

   Employee Stock Purchase Plan

 

91

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

311

 

 

 

-

 

 

 

-

 

 

 

311

 

Issuance of common stock, net of

   issuance costs, in conjunction

   with an underwritten public

   offering and an At Market

   Sales Agreement (see Note 11)

 

24,106

 

 

 

23

 

 

 

-

 

 

 

-

 

 

 

107,673

 

 

 

-

 

 

 

-

 

 

 

107,696

 

Stock compensation expense

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,866

 

 

 

-

 

 

 

-

 

 

 

5,866

 

Total other comprehensive income

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

292

 

 

 

-

 

 

 

292

 

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(64,174

)

 

 

(64,174

)

Balances at June 30, 2020

 

109,503

 

 

$

109

 

 

 

4

 

 

$

-

 

 

$

1,343,279

 

 

$

(2,095

)

 

$

(1,282,998

)

 

$

58,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

Shares

 

 

Par Amount

 

 

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, in conjunction

   with an At Market Sales

   Agreement (see Note 11)

 

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

 

 

 

-

 

 

$

-