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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 March 31, 2023

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 720

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

Nasdaq Global Select Market

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 April 28, 2023, the registrant had outstanding 128,489,060 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 March 31, 2023 and December 31, 2022

4

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022

5

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022

6

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022

7

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022

8

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

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

24

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

34

Item 4.

Controls and Procedures

34

PART II OTHER INFORMATION

 

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

64

Item 3.

Defaults upon Senior Securities

64

Item 4.

Mine Safety Disclosures

64

Item 5.

Other Information

64

Item 6.

Exhibits

65

SIGNATURES

67

 

 

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, CpG 1018 adjuvant or any future product, our anticipated market opportunity and level of sales of HEPLISAV-B and CpG 1018 adjuvant, our ability to manufacture sufficient supply of HEPLISAV-B to meet future demand, our business, collaboration and regulatory strategy, our ability to successfully support the development, manufacture and commercialization of other vaccines containing our CpG 1018 adjuvant, including any current or potential vaccine or vaccine candidate for COVID-19 that stem from any of our collaborations, our ability to manufacture sufficient supply of CpG 1018 adjuvant to meet potential future demand in connection with new vaccines, including COVID-19 vaccines, our ability to advance our other product candidates, such as our Tdap, shingles and plague programs, and to otherwise develop and expand our clinical research pipeline, meet regulatory requirements, including post-marketing obligations and commitments, 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 its subsidiaries.

 

 

3


 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

Dynavax Technologies Corporation

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

 

 

March 31,

 

 

December 31,

 

 

2023

 

 

2022

 

 

(unaudited)

 

 

(Note 1)

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

174,350

 

 

$

202,004

 

Marketable securities available-for-sale

 

477,606

 

 

 

422,391

 

Accounts receivables, net of allowance for doubtful accounts of $12,313 and $0 at March 31, 2023 and December 31, 2022, respectively

 

101,738

 

 

 

145,130

 

Other receivables

 

3,128

 

 

 

2,385

 

Inventories, net

 

57,693

 

 

 

59,446

 

Prepaid expenses and other current assets

 

15,626

 

 

 

85,629

 

Total current assets

 

830,141

 

 

 

916,985

 

Property and equipment, net

 

38,159

 

 

 

37,596

 

Operating lease right-of-use assets

 

25,433

 

 

 

25,745

 

Goodwill

 

2,038

 

 

 

2,006

 

Restricted cash

 

210

 

 

 

207

 

Other assets

 

73,941

 

 

 

3,311

 

Total assets

$

969,922

 

 

$

985,850

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

7,296

 

 

$

3,211

 

Accrued research and development

 

5,155

 

 

 

4,775

 

CEPI accrual (Note 6)

 

47,401

 

 

 

107,738

 

Accrued liabilities

 

27,833

 

 

 

30,719

 

Other current liabilities

 

3,830

 

 

 

3,631

 

Total current liabilities

 

91,515

 

 

 

150,074

 

Convertible Notes, net of debt discount of $3,645 and $3,922 at March 31, 2023 and December 31, 2022, respectively (Note 7)

 

221,855

 

 

 

221,578

 

Long-term portion of lease liabilities

 

32,131

 

 

 

32,801

 

CEPI accrual long-term (Note 6)

 

60,337

 

 

 

-

 

Other long-term liabilities

 

352

 

 

 

384

 

Total liabilities

 

406,190

 

 

 

404,837

 

Commitments and contingencies (Note 5)

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock: $0.001 par value; 5,000 shares authorized at
  March 31, 2023 and December 31, 2022;
zero shares outstanding at
  March 31, 2023 and December 31, 2022, respectively

 

-

 

 

 

-

 

Common stock: $0.001 par value; 278,000 shares authorized at
  March 31, 2023 and December 31, 2022;
128,472 shares and 127,604
   shares issued and outstanding at March 31, 2023 and December 31, 2022,
   respectively

 

128

 

 

 

128

 

Additional paid-in capital

 

1,516,331

 

 

 

1,510,518

 

Accumulated other comprehensive loss

 

(4,200

)

 

 

(5,438

)

Accumulated deficit

 

(948,527

)

 

 

(924,195

)

Total stockholders’ equity

 

563,732

 

 

 

581,013

 

Total liabilities and stockholders’ equity

$

969,922

 

 

$

985,850

 

 

See accompanying notes.

 

4


 

Dynavax Technologies Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Revenues:

 

 

 

 

 

 

Product revenue, net

 

$

43,451

 

 

$

112,327

 

Other revenue

 

 

3,474

 

 

 

1,665

 

Total revenues

 

 

46,925

 

 

 

113,992

 

Operating expenses:

 

 

 

 

 

 

Cost of sales - product

 

 

14,712

 

 

 

39,962

 

Research and development

 

 

13,605

 

 

 

11,095

 

Selling, general and administrative

 

 

36,543

 

 

 

32,172

 

Bad debt expense

 

 

12,313

 

 

 

-

 

Total operating expenses

 

 

77,173

 

 

 

83,229

 

(Loss) income from operations

 

 

(30,248

)

 

 

30,763

 

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

6,597

 

 

 

261

 

Interest expense

 

 

(1,686

)

 

 

(1,680

)

Sublease income

 

 

1,598

 

 

 

1,609

 

Change in fair value of warrant liability (Note 10)

 

 

-

 

 

 

1,801

 

Other

 

 

23

 

 

 

105

 

Net (loss) income before income taxes

 

 

(23,716

)

 

 

32,859

 

Provision for income taxes

 

 

(616

)

 

 

-

 

Net (loss) income

 

$

(24,332

)

 

$

32,859

 

Net (loss) income per share attributable to common stockholders

 

 

 

 

 

 

Basic

 

$

(0.19

)

 

$

0.26

 

Diluted

 

$

(0.19

)

 

$

0.22

 

Weighted-average shares used in computing net (loss) income per share attributable to common stockholders:

 

 

 

 

 

 

Basic

 

 

127,921

 

 

 

124,555

 

Diluted

 

 

127,921

 

 

 

149,425

 

See accompanying notes.

 

5


 

Condensed Consolidated Statements of Comprehensive (Loss) Income

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

 

 

2023

 

 

2022

 

 

Net (loss) income

 

$

(24,332

)

 

$

32,859

 

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

Change in unrealized loss on marketable securities available-
   for-sale

 

 

666

 

 

 

(1,272

)

 

Cumulative foreign currency translation adjustments

 

 

572

 

 

 

(625

)

 

Total other comprehensive income (loss)

 

 

1,238

 

 

 

(1,897

)

 

Total comprehensive (loss) income

 

$

(23,094

)

 

$

30,962

 

 

 

See accompanying notes.

 

 

 

6


 

Dynavax Technologies Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

Common Stock

 

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2023

 

Shares

 

 

Par Amount

 

 

Shares

 

 

Par Amount

 

 

Additional
Paid-In Capital

 

 

Accumulated
Other
Comprehensive (Loss)

 

 

Accumulated Deficit

 

 

Total
Stockholders' Equity

 

Balances at December 31, 2022

 

 

127,604

 

 

$

128

 

 

 

-

 

 

$

-

 

 

$

1,510,518

 

 

$

(5,438

)

 

$

(924,195

)

 

$

581,013

 

Issuance of common stock upon exercise of stock options

 

 

41

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

239

 

 

 

-

 

 

 

-

 

 

 

239

 

Issuance of common stock upon release of restricted stock awards, net of statutory tax withholdings

 

 

746

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,237

)

 

 

-

 

 

 

-

 

 

 

(5,237

)

Issuance of common stock under Employee Stock Purchase Plan

 

 

81

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

777

 

 

 

-

 

 

 

-

 

 

 

777

 

Stock compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,034

 

 

 

-

 

 

 

-

 

 

 

10,034

 

Total other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,238

 

 

 

-

 

 

 

1,238

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(24,332

)

 

 

(24,332

)

Balances at March 31, 2023

 

 

128,472

 

 

$

128

 

 

 

-

 

 

$

-

 

 

$

1,516,331

 

 

$

(4,200

)

 

$

(948,527

)

 

$

563,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2022

 

Shares

 

 

Par Amount

 

 

Shares

 

 

Par Amount

 

 

Additional
Paid-In Capital

 

 

Accumulated
Other
Comprehensive (Loss)

 

 

Accumulated Deficit

 

 

Total
Stockholders' Equity

 

Balances at December 31, 2021

 

 

122,945

 

 

$

123

 

 

 

-

 

 

$

-

 

 

$

1,441,868

 

 

$

(2,266

)

 

$

(1,217,351

)

 

$

222,374

 

Issuance of common stock upon exercise of stock options

 

 

155

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,122

 

 

 

-

 

 

 

-

 

 

 

1,122

 

Issuance of common stock upon release of restricted stock awards

 

 

1,236

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

Issuance of common stock upon exercise of warrants

 

 

1,879

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

24,668

 

 

 

-

 

 

 

-

 

 

 

24,670

 

Issuance of common stock under Employee Stock Purchase Plan

 

 

82

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

710

 

 

 

-

 

 

 

-

 

 

 

710

 

Stock compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,646

 

 

 

-

 

 

 

-

 

 

 

7,646

 

Total other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,897

)

 

 

-

 

 

 

(1,897

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

32,859

 

 

 

32,859

 

Balances at March 31, 2022

 

 

126,297

 

 

$

126

 

 

 

-

 

 

$

-

 

 

$

1,476,013

 

 

$

(4,163

)

 

$

(1,184,492

)

 

$

287,484

 

 

See accompanying notes.

 

 

 

7


 

Dynavax Technologies Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

2023

 

 

2022

 

Operating activities

 

 

 

 

 

Net (loss) income

$

(24,332

)

 

$

32,859

 

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

 

 

 

 

 

Depreciation and amortization

 

1,013

 

 

 

985

 

Amortization of right-of-use assets and loss on disposal of property and equipment

 

642

 

 

 

743

 

Accretion of discounts on marketable securities

 

(3,498

)

 

 

(181

)

Change in fair value of warrant liability (Note 10)

 

-

 

 

 

(1,801

)

Stock-based compensation expense

 

10,034

 

 

 

7,646

 

Bad debt expense (Note 6)

 

12,313

 

 

 

-

 

Non-cash interest expense

 

1,686

 

 

 

1,680

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts and other receivables, net

 

30,336

 

 

 

(5,120

)

Inventories, net

 

1,753

 

 

 

(17,703

)

Prepaid manufacturing

 

-

 

 

 

21,325

 

Prepaid expenses and other current assets

 

(1,304

)

 

 

(9,231

)

Other assets

 

677

 

 

 

(49

)

Accounts payable

 

4,096

 

 

 

16,938

 

CEPI accrual (Note 6)

 

-

 

 

 

(21,478

)

Lease liabilities

 

(793

)

 

 

(806

)

Deferred revenue

 

-

 

 

 

(36,661

)

Accrued liabilities and other liabilities

 

(5,001

)

 

 

(39,589

)

Net cash provided by (used in) operating activities

 

27,622

 

 

 

(50,443

)

Investing activities

 

 

 

 

 

Purchases of marketable securities

 

(185,301

)

 

 

(250,375

)

Proceeds from maturities of marketable securities

 

134,250

 

 

 

35,250

 

Purchases of property and equipment, net

 

(1,283

)

 

 

(1,358

)

Net cash used in investing activities

 

(52,334

)

 

 

(216,483

)

Financing activities

 

 

 

 

 

Proceeds from warrants exercises

 

-

 

 

 

8,455

 

Proceeds from exercise of stock options and/or release of restricted stock awards, net

 

239

 

 

 

1,122

 

Proceeds from Employee Stock Purchase Plan

 

777

 

 

 

710

 

Payments for taxes related to net share settlement of RSUs

 

(4,106

)

 

 

-

 

Net cash (used in) provided by financing activities

 

(3,090

)

 

 

10,287

 

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

 

151