JP Morgan Week 2025 – Ryan Spencer

Yeah, thank you for coming over. So first of all, tell me a little bit about Dynavax. What do you guys do and how are you kind of differentiating in your space?

Yeah, so we announced with our press release on Monday to start kick off the conference a number of our key updates, which I think summarizes well what we do and what we're all about. I'll just walk through that quickly. We announced on Monday full year revenue for our lead asset, which is an adult hepatitis B vaccine that uses our proprietary adjuvant to improve the dosing regimen. We announced total revenue of $268 million for that product, and that's in clinic. Yeah, that's right. We launched it in 2018, so it's been continuously growing. That's record revenue, as is every year because we're on a continued growth path. We're very excited about the achievement there. We also completed enrollment for our shingles clinical trial, so we announced that on Monday as well. We now expect data to be available in Q3 of this year, and that again leverages the power of the adjuvant. This kind of summarizes what we're all about: leveraging CpG 1018 to improve vaccines. Then we also announced another contract with the DoD to support their plague program that we're helping them develop for another $30 million. So nice important updates to start the year, but also kind of summarizes where our focus is.

Yeah, so CpG 1018 is a TLR9 agonist. TLR9 is a pattern recognition receptor found primarily on plasmacytoid dendritic cells, which are key cells in the immune response. By including this with vaccine antigen, you basically stimulate pDCs, which then take up the antigen and kick off the immune response. It's a very specific MOA for an adjuvant. Some of the key value points are: with HepB, we demonstrated fewer doses but still generated higher levels of seroprotection, but importantly, the tolerability profile is quite good for an adjuvant. Adjuvants often come with a sacrifice: you get great improved immunogenicity but you have local or systemic adverse events, which for a vaccine is a particularly tough sell. Our product, which is a wonderful product, would not be very viable if it had a very intense negative tolerability profile. We think there are opportunities to leverage that comprehensive profile of an adjuvant. That's actually what underpins our shingles program. The current vaccine on the market is very highly efficacious, so you're not really going to do better than that, but it also has a pretty tough tolerability profile. We think by leveraging our adjuvant, we can improve on tolerability to the point that it provides a much better experience for patients.

That's actually a very interesting development for our business over the last few years. HepB was a very long-standing adult recommendation that was risk-based. Risk-based recommendations are tough to administer because you have to have patients identify with risk factors. Physicians don't necessarily know what your behavioral risks are, especially if they're stigmatized in some way. HepB obviously had that challenge. We saw evolution of that recommendation first including people living with diabetes, and then eventually in 2022 it expanded to basically all adults. HepB is one of the most widely recommended vaccines now in the U.S., ahead of Pneumococcal, only behind flu and I guess COVID because they have such broad age-based recommendations. That's a bit of a hidden fact that not a lot of people are aware of: if you're an adult, you're recommended to be vaccinated against Hepatitis B. It's a great advancement along the path to eliminate it as a public health threat. Shingles is an age-based recommendation as well, over 55 years old is recommended to be vaccinated. Shingles is related to chickenpox. If you don't get chickenpox, you can get shingles? No, what it is, is when you did get chickenpox or were exposed to the virus, it's in your body, it's latent. It's a late varicella zoster infection that's living in cells in your body that will reemerge. For most people, if it reemerges, your immune system kind of knocks it down, nothing happens. But as you get older, that mechanism isn't as strong, so it will emerge and erupt in very painful sores and blisters on your body. It's a very painful disease and can also cause other more significant outcomes as well.

Well, we know that for prevention, prevention is always tough anyway. We do know that there are certain parts of the population that don't believe in vaccination as much as others. But the reality is, the coverage rates for Hepatitis B are quite low, in the 20s as far as that patient population that wasn't vaccinated as infants. Of that adult cohort, there's still a large portion that is recommended to be vaccinated and is not. So frankly, while there's going to be a reasonable chunk of those patients that will just never get vaccinated because of whatever beliefs or elements of the COVID pandemic and political elements that emerged from there, there's still a lot of people that are amenable to taking a vaccine, and we think we'll eventually have good success driving those coverage rates much higher. So I don't think it's a huge issue. I think we have great data, great science, the value proposition for being vaccinated is there. We don't worry too much about it, although it's definitely part of our industry that we have to keep in mind.

Well, no. I mean, we get the question a lot, but the reality is we have no real insight onto what the agendas will be. We know that we are quite proud of the work we've done with HepB. We have great scientific data which we are happy to share to make sure everyone's well aware of. I think HepB is somewhat insulated from some of the areas that are discussed commonly when you think about vaccination: you already noted COVID has this political polarization, sometimes pediatric mandates which are always a hot button issue. Those kinds of things, we're sort of insulated from that for an adult HepB vaccine. So it's an industry thing that's going on, but ultimately too soon to tell, and I don't think it has a huge impact on us long term.

Yeah, look, I think the universe of simply taking something that's already there and adjuvating it is limited. We know we did it with HepB. Shingles was a new approach, but we're sort of following on the Shingrix product and using the adjuvant with the gE protein. There are a couple other targets that we have that is simply leveraging the power of the adjuvant against known antigen technology. That's kind of how we consider what we've done to date with the adjuvant in our hands. But we do have a wide range of collaborations where others are using the adjuvant in combination with more novel antigen discovery work. Somebody else is working on something new and you can enhance that. An example we've talked about publicly is our collaboration with Mount Sinai for universal influenza. They have a very robust universal influenza and pan-influenza program, or a couple programs funded by NIH and other mechanisms, and they needed an adjuvant or wanted an adjuvant to be used with this. So we made CpG 1018 available. We are not conducting that work; CpG 1018 is a great tool to complement the novel antigen design that they're doing. However, we do think it'll be a very meaningful component of it. So I think the sky is the limit from that perspective, in that while we have continued innovation in the space, adjuvants can be a meaningful part of it, and we will look to do this within partnership with people.

That's right. And it has to have a different approach than what we're doing for traditional seasonal vaccines because they're inherently limited. So it's not that simple. Viruses, as we've seen with COVID and with flu, there are evolutionary processes that keep them ready to evolve in and around things. The better you do, the more pressure you put on the virus to evolve and shift, so you're also dealing with that reality. I think the approach has to be unique and it's a challenge. But look, flu can come out with a new strain faster than you can come out with a new vaccine, possibly. I think that's why the MOA of whatever that universal solution will eventually be is going to be critical. But there's great work being done by people in the industry across different pathways and different ideas, so I'm hopeful that we'll eventually solve that challenge.

Well, we spend most of our time here talking about ourselves, so no, I don't have anything specific to comment on this year. For Dynavax, as I assume for many of our colleagues in the space, we're very excited for 2025. For us, this will hopefully be a transformational year across our business: putting our shingles program on the map with very clear data and commitments to advance based on supportive data, which is always nice, as well as continue to advance our lead asset and have another record year of revenue. Plus, we have some real desire, and this kind of gets backed out to the macro factor, to continue to drive value through corporate development. So we're very active in looking at other ways to leverage our late-stage and commercial capabilities by taking on new assets that could benefit where we could be very beneficial in that transition, which is an important part of what happens here as a company that's already in clinic and getting record revenues.

No, the M&A environment and funding environment is relevant to us because of our corporate development desires. While we're well funded for our development programs and our commercial asset, and frankly we've already committed to profitability, recurring profitability on that asset, so we're very strong financially, we don't have to worry about us being funded. But when you think about M&A or corporate development, business development, access to capital for other ideas, it will change the willingness for companies to transact, for example. So it is relevant to us as far as will we have that access to the technologies, what does that look like, what kind of deal structures are there, things like that. So it does definitely matter, the landscape matters. But we tend to focus first on what's the product, and then what's the strategy, and then we'll figure out some of the economics and how to get it done.

Yeah, thank you. I appreciate you coming over to our lovely accommodations, and really appreciate you taking the time. Enjoy the rest of the show.