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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 September 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 November 2, 2020, the registrant had outstanding 110,172,859 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 September 30, 2020 and December 31, 2019

4

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019

5

 

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

5

 

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

6

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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

25

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

33

Item 4.

Controls and Procedures

33

 

PART II OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

53

Item 5.

Other Information

53

Item 6.

Exhibits

54

 

SIGNATURES

56

 

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)

 

 

September 30,

 

 

December 31,

 

 

2020

 

 

2019

 

 

(unaudited)

 

 

(Note 1)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

32,688

 

 

$

39,884

 

Marketable securities available-for-sale

 

144,473

 

 

 

111,171

 

Accounts and other receivables, net

 

35,023

 

 

 

8,886

 

Inventories, net

 

59,033

 

 

 

41,332

 

Prepaid expenses and other current assets

 

18,786

 

 

 

7,380

 

Total current assets

 

290,003

 

 

 

208,653

 

Property and equipment, net

 

30,379

 

 

 

32,022

 

Intangible assets, net

 

-

 

 

 

2,500

 

Operating lease right-of-use assets

 

27,353

 

 

 

30,252

 

Goodwill

 

2,196

 

 

 

2,081

 

Restricted cash

 

226

 

 

 

216

 

Other assets

 

3,238

 

 

 

3,344

 

Total assets

$

353,395

 

 

$

279,068

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

5,273

 

 

$

9,278

 

Accrued research and development

 

2,939

 

 

 

4,120

 

Accrued liabilities

 

17,192

 

 

 

14,802

 

Warrant liability

 

10,660

 

 

 

14,860

 

Deferred revenue

 

21,712

 

 

 

-

 

Other current liabilities

 

8,849

 

 

 

9,987

 

Total current liabilities

 

66,625

 

 

 

53,047

 

Long-term debt, net of debt discount of $1,172 and $1,394 at September 30, 2020 and

   December 31, 2019, respectively

 

179,733

 

 

 

178,601

 

Long-term portion of lease liabilities

 

35,519

 

 

 

37,845

 

Other long-term liabilities

 

2,234

 

 

 

1,285

 

Total liabilities

 

284,111

 

 

 

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 September 30, 2020

   and December 31, 2019, respectively

 

-

 

 

 

-

 

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

   September 30, 2020 and December 31, 2019, respectively; 110,173 shares and 83,871

   shares issued and outstanding at September 30, 2020 and December 31, 2019,

   respectively

 

110

 

 

 

84

 

Additional paid-in capital

 

1,348,793

 

 

 

1,229,417

 

Accumulated other comprehensive loss

 

(1,022

)

 

 

(2,387

)

Accumulated deficit

 

(1,278,597

)

 

 

(1,218,824

)

Total stockholders’ equity

 

69,284

 

 

 

8,290

 

Total liabilities and stockholders’ equity

$

353,395

 

 

$

279,068

 

 

See accompanying notes.

4


Dynavax Technologies Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue, net

 

$

13,276

 

 

$

10,158

 

 

$

26,195

 

 

$

24,086

 

Other revenue

 

 

138

 

 

 

417

 

 

 

806

 

 

 

563

 

Total revenues

 

 

13,414

 

 

 

10,575

 

 

 

27,001

 

 

 

24,649

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales - product

 

 

4,031

 

 

 

3,824

 

 

 

7,352

 

 

 

7,765

 

Cost of sales - amortization of intangible assets

 

 

-

 

 

 

2,324

 

 

 

2,500

 

 

 

6,894

 

Research and development

 

 

8,521

 

 

 

12,660

 

 

 

19,058

 

 

 

50,062

 

Selling, general and administrative

 

 

21,538

 

 

 

18,459

 

 

 

61,418

 

 

 

54,668

 

Gain on sale of assets (Note 5)

 

 

(6,851

)

 

 

-

 

 

 

(6,851

)

 

 

-

 

Restructuring

 

 

-

 

 

 

3,937

 

 

 

-

 

 

 

12,714

 

Total operating expenses

 

 

27,239

 

 

 

41,204

 

 

 

83,477

 

 

 

132,103

 

Loss from operations

 

 

(13,825

)

 

 

(30,629

)

 

 

(56,476

)

 

 

(107,454

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

269

 

 

 

890

 

 

 

1,190

 

 

 

2,604

 

Interest expense

 

 

(4,794

)

 

 

(4,779

)

 

 

(14,257

)

 

 

(12,111

)

Sublease income

 

 

1,926

 

 

 

891

 

 

 

5,779

 

 

 

891

 

Change in fair value of warrant liability (Note 11)

 

 

21,245

 

 

 

-

 

 

 

4,200

 

 

 

-

 

Other

 

 

(420

)

 

 

168

 

 

 

(209

)

 

 

226

 

Net income (loss)

 

 

4,401

 

 

 

(33,459

)

 

 

(59,773

)

 

 

(115,844

)

Preferred stock deemed dividend

 

 

-

 

 

 

(3,267

)

 

 

-

 

 

 

(3,267

)

Net income (loss) allocable to common stockholders

 

$

4,401

 

 

$

(36,726

)

 

$

(59,773

)

 

$

(119,111

)

Basic net income (loss) per share allocable to common stockholders

 

$

0.04

 

 

$

(0.49

)

 

$

(0.61

)

 

$

(1.75

)

Weighted average shares used to compute basic net income (loss)

   per share allocable to common stockholders

 

 

109,816

 

 

 

75,106

 

 

 

97,589

 

 

 

68,032

 

Diluted net loss per share allocable to common stockholders

 

$

(0.15

)

 

$

(0.49

)

 

$

(0.65

)

 

$

(1.75

)

Weighted average shares used to compute diluted net loss

   per share allocable to common stockholders

 

 

111,973

 

 

 

75,106

 

 

 

98,577

 

 

 

68,032

 

 

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income (loss)

 

$

4,401

 

 

$

(33,459

)

 

$

(59,773

)

 

$

(115,844

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of realized gain on available-for-sale securities

   recognized in interest income

 

 

(108

)

 

 

-

 

 

 

(21

)

 

 

-

 

Change in unrealized gain on marketable securities available-

   for-sale

 

 

(75

)

 

 

(71

)

 

 

30

 

 

 

105

 

Foreign currency translation adjustments

 

 

1,256

 

 

 

(1,034

)

 

 

1,356

 

 

 

(1,178

)

Total other comprehensive income (loss)

 

 

1,073

 

 

 

(1,105

)

 

 

1,365

 

 

 

(1,073

)

Total comprehensive income (loss)

 

$

5,474

 

 

$

(34,564

)

 

$

(58,408

)

 

$

(116,917

)

 

See accompanying notes.

 

 

5


Dynavax Technologies Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

Common Stock

 

 

Preferred Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

Three Months Ended September 30, 2020

 

Shares

 

 

Par Amount

 

 

Shares

 

 

Par Amount

 

 

Capital

 

 

(Loss) Income

 

 

Deficit

 

 

Equity

 

Balances at June 30, 2020

 

 

109,503

 

 

$

109

 

 

 

4

 

 

$

-

 

 

$

1,343,279

 

 

$

(2,095

)

 

$

(1,282,998

)

 

$

58,295

 

Issuance of common stock upon exercise of stock options and restricted stock awards, net

 

 

457

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

212

 

 

 

-

 

 

 

-

 

 

 

213

 

Issuance of common stock under Employee Stock Purchase Plan

 

 

104

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

361

 

 

 

-

 

 

 

-

 

 

 

361

 

Issuance of common stock, net of issuance costs, in conjunction with an At Market Sales

   Agreement (see Note 11)

 

 

109

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

839

 

 

 

-

 

 

 

-

 

 

 

839

 

Stock compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,102

 

 

 

-

 

 

 

-

 

 

 

4,102

 

Total other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,073

 

 

 

-

 

 

 

1,073

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,401

 

 

 

4,401

 

Balances at September 30, 2020

 

 

110,173

 

 

$

110

 

 

 

4

 

 

$

-

 

 

$

1,348,793

 

 

$

(1,022

)

 

$

(1,278,597

)

 

$

69,284

 

Nine Months Ended September 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 of common stock upon exercise of stock options and restricted stock awards, net

 

 

1,192

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

223

 

 

 

-

 

 

 

-

 

 

 

224

 

Issuance of common stock under Employee Stock Purchase Plan

 

 

195

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

672

 

 

 

-

 

 

 

-

 

 

 

672

 

Issuance of common stock, net of issuance costs, in conjunction with an underwritten public

   offering and an At Market Sales Agreement (see Note 11)

 

 

24,215

 

 

 

24

 

 

 

-

 

 

 

-

 

 

 

108,513

 

 

 

-

 

 

 

-

 

 

 

108,537

 

Stock compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,968

 

 

 

-

 

 

 

-

 

 

 

9,968

 

Total other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,365

 

 

 

-

 

 

 

1,365

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(59,773

)

 

 

(59,773

)

Balances at September 30, 2020

 

 

110,173

 

 

$

110

 

 

 

4

 

 

$

-

 

 

$

1,348,793

 

 

$

(1,022

)

 

$

(1,278,597

)

 

$

69,284

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Preferred Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

Three Months Ended September 30, 2019

 

Shares

 

 

Par Amount

 

 

Shares

 

 

Par Amount

 

 

Capital

 

 

(Loss) Income

 

 

Deficit

 

 

Equity

 

Balances at June 30, 2019

 

 

65,155

 

 

$

65

 

 

-

 

 

$

-

 

 

$

1,161,115

 

 

$

(1,983

)

 

$

(1,148,609

)

 

$

10,588

 

Issuance of common stock upon exercise of stock options and restricted stock awards, net

 

 

138

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Issuance of common stock under Employee Stock Purchase Plan

 

 

47

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

158

 

 

 

-

 

 

 

-

 

 

 

158

 

Issuance of common stock, net of issuance costs, in conjunction with an underwritten public

   offering (see Note 11)

 

 

18,525

 

 

 

19

 

 

 

-

 

 

 

-

 

 

 

46,146

 

 

 

-

 

 

 

-

 

 

 

46,165

 

Issuance of Series B convertible preferred stock, net of issuance costs in conjunction with an

   underwritten public offering (see Note 11)

 

 

-

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

12,061

 

 

 

-

 

 

 

-