Biotech Talk: Cowen Shares Thoughts on Dynavax (DVAX) Following Favorable Data in Advanced Head and Neck Cancer

Cowen's Phil Nadeau sings the praises of this "undervalued" biotech stock, encouraged to see DVAX's cancer drug SD-101 revealed well tolerated results in a mid-stage trial.


Dynavax Technologies Corporation (NASDAQ:DVAX) unleashed encouraging initial conference data in advanced head and neck cancer yesterday at the American Association for Cancer Research (AACR) yearly meeting, and one bull is taking notice.

Cowen analyst Phil Nadeau is positive on “preliminary signs of activity” for the company’s asset, TLR 9 agonist SD-101 in combination with Merck’s Keytruda. The Phase Ib/II trial impressed with DVAX’s treatment hitting an Objective Response Rate (ORR) of 33%. Considering Keytruda monotherapy reached a 15% ORR in H&N cancer, the analyst takes this in stride as what seems to be “additive efficacy” weighing in SD-101’s corner.

In reaction, the analyst reiterates an Outperform rating on DVAX stock with a $30 price target, which implies a close to 57% upside from current levels. (To watch Nadeau’s track record, click here)

“We view the efficacy findings of adding SD-101 to Keytruda in patients with HNSCC as encouraging, particularly given SD-101’s very benign side effect profile. In the KEYNOTE-040 trial Keytruda monotherapy produced an ORR of 15%, and therefore the 33% ORR generated by Keytruda + SD-101 is more than double what one would anticipate for Keytruda monotherapy. This suggests that SD-101 has additive efficacy in head and neck cancer, with seemingly little added toxicity. In fact, this is the third tumor type in which SD-101 has produced signs of additive activity with benign safety, including melanoma and lymphoma. That said, patient numbers remain small. For example, the difference between the 15% ORR (n=3/18) one would expect for Keytruda monotherapy, and a 33% ORR (n=6/18) is literally just three additional responses given the small number of patients. Therefore it is hard to have a lot of confidence in the magnitude of SD-101’s effect,” Nadeau highlights, noting that the data merits more development of this asset.

While the analyst continues to believe the Street is underestimating the compelling value of DVAX stock, he likewise recognizes that patient numbers in this trial are “admittedly small.” Should development prove to be a real success, Nadeau is confident that this would drive meaningful upside to DVAX shares. Until then, the analyst is aware that a small patient trial at times is “misleading,” and he as such looks with anticipation to data from longer trials with bigger patient numbers.

TipRanks reveal strong bullish attention backing the drug maker, with 4 out of 5 analysts in the last 3 months rating a Buy on DVAX and just 1 maintaining a Hold. Notably, the 12-month average price target stands tall at $29.40, suggesting a whopping almost 56% in upside potential from where the stock is currently trading.