Dynavax axes 38% of staff, focuses on I-O after FDA setback

An axe in a stump
Dynavax has retooled to reflect its status as a clinical R&D-stage company.

Dynavax has laid off 38% of its workforce and halted manufacturing of its experimental hepatitis B vaccine in response to last year’s regulatory setback and its failure to find a partner. The rejig tilts the company’s focus toward immuno-oncology, while leaving it with enough cash to keep pushing the hepatitis B vaccine toward approval unpartnered.

News of the cuts comes two months after the FDA again rejected an application to market the vaccine, Heplisav-B. At the time, Dynavax hoped to land a partner that would commit the time and money needed to get Heplisav-B ready for a third run at FDA. That is still the goal. But with Dynavax failing to put together the hoped for swift deal, it has reorganized its own business so Heplisav-B can limp toward the finish line while other assets advance through the clinic.

“Reducing our workforce is a sad and difficult decision. But it is one we believe is necessary to align our organization to reflect that of a clinical R&D-stage company with a promising immuno-oncology pipeline, which has become a strategically important area of our business,” Dynavax CEO Eddie Gray said in a statement.

The rethink has cost 38% of Dynavax’s workforce their jobs. Headcount stood at 234 at the end of 2015, but grew last year ahead of the anticipated approval of Heplisav-B. With the FDA setback punting the possible approval date down the road, Dynavax has torn into its organization and stopped making the vaccine. The company will retain most of the staff at its German production plant but put them on a leave of absence, forcing it to rely on stockpiles for its needs.

Dynavax plans to respond to the FDA’s CRL this month, setting it on a path it expects to lead it through a six-month review process and on to a long-sought approval. That outcome depends on Dynavax persuading the FDA the imbalance in cardiac events and other issues raised by the regulator aren’t a barrier to approval. Dynavax plans to spend $1 million a month on Heplisav-B, leaving most of its cash free to fund the advance of its immuno-oncology pipeline.

Whatever happens to Heplisav-B, Dynavax sees the immuno-oncology programs as its future. The pipeline consists of a TLR9 agonist Dynavax is trialling combination with Merck’s Keytruda in patients with metastatic melanoma. And a second TLR9 agonist preclinical models suggest could have a future in lung cancer. Dynavax plans to move this second candidate into the clinic in the second quarter.