Dynavax Technologies (DVAX) is a biotechnology company that has developed a vaccine for use against the Hepatitis B virus. Back in 2013 the company had received a CRL -- complete response letter from the FDA -- for its Hepatitis B vaccine known as Hepislav-B. The vaccine was shown to be very efficacious against the Hepatitis B virus but the problem was that it produced a lot of safety concerns that the FDA wanted to address before approval. There were also some minor concerns about the manufacturing process that Dynavax used to create their vaccines. 

The manufacturing problems can be addressed easily by Dynavax by providing further evidence to the FDA on the way the vaccines are made. The problem really lies with the safety of Hepislav-B vaccine. That is because to prove that Hepislav-B doesn't produce a lot of safety problems the company had to initiate a large phase 3 trial to specifically determine both the safety and efficacy of the vaccine. The safety concern from the FDA was that certain adjuvants being added to Hepislav-B produced autoimmune problems in some patients. 

As a result, a trial known as HBV-23 was established with Hepislav-B as the main vaccine component of the trial for most patients, but other patients received a control vaccine known as Engerix-B. The key feature of this trial was that Dynavax had to follow the FDA protocol and create an independent Data and Safety Monitoring Board -- DMSB. The primary reason we are now saying that shares of Dynavax may offer attractive risk/reward potential is because this past week, the DSMB unblinded data and determined that more than 50% of patients had reached the 12-week followup point in the study. With no safety problems found, the DSMB decided that the HBV-23 trial using Hepislav-B should be continued without adjusting dosage or changing any adjuvant. 

This is a positive step for the company as they have passed the first DMSB review. We identify this as the first review because the study was set up to have a total of three time points where the DSMB was to determine if the study should continue as planned or be stopped completely because of an unacceptable amount of safety problems. Therefore there is still risk that at a later time point the DSMB could put the brakes on the test, which could cause a steep decline in share price.

The company recently did a 1 for 10 reverse stock split which brought the share price up to more comfortable trading levels for institutions and also lowered the amount of shares outstanding. 

The phase 3 trial for HBV-23 is set to finish by October 2015 so there is still a lot of time to invest in Dynavax and timing a great entry point. If the company is successful in its phase 3 trial it would then be able to once again submit an NDA filing for Hepislav-B approval. The approval of this vaccine and subsequent marketing effort should then value the company in the billions of dollars as the Hepatitis B market is set to reach a possible annual sales revenue of $10 billion. We recommend that investors keep an eye on this stock in the coming year based on its Hepislav-B vaccine.