Dynavax (DVAX) Stock Is Undervalued with 88% Upside Potential, Says Cowen

Cowen analyst Phil Nadeau is out with a research note on shares of Dynavax (NASDAQ:DVAX) following updates presented at the American Society of Clinical Oncology (ASCO) Conference. Dynavax presented updated results from the Phase 1b/2 study (SYNERGY-001) of TLR9 agonist, SD-101 in combination with Keytruda for advanced melanoma patients. Management also hosted an analyst event to discuss the results, for which Nadeau provides further color.

“We think there are a number of intriguing signs of activity in [yesterday’s] poster which warrant further study. In our pre-ASCO call with a melanoma physician expert, he said a response rate of at least 60% would be encouraging, as it is above that which has been produced by Keytruda monotherapy in Phase III trials, and as it is more or less in line with the response rate produced by the combination of Opdivo and Yervoy. Therefore the 70% ORR for the <2mg dose groups is supportive of activity […] Nonetheless, while there are a number of encouraging signs, we do find it hard to derive too much confidence from a single arm Phase II trial. Even a 70% ORR is not definitively above response rates that Keytruda or Opdivo have produced in select patient populations (a poster during today’s session described an ORR of 65% for Opdivo + epacadostat in PD-1 naïve melanoma),” Nadeau wrote.

Net net, “We think there is little or no value in DVAX’s stock today for SD-101, and in fact our own $30 DCF-based price target is based solely on economics from Heplisav. Therefore if successfully developed SD-101 could be a major driver of shareholder value,” the analyst concluded. (To watch Nadeau’s track record, click here)

Wall Street backs Nadeau’s bullish bite into the biotech player, as TipRanks analytics exhibit DVAX as a Strong Buy. Out of 5 analysts polled in the last 3 months, all 5 are bullish on Dynavax stock. With a return potential of nearly 87%, the stock’s consensus target price stands at $29.80.

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