Dynavax Announces Third Quarter 2009 Financial Results

Dynavax reported $46.4 million in cash, cash equivalents, marketable securities and investments held by Symphony Dynamo, Inc. (SDI), collectively referred to as total cash, at September 30, 2009. This compared to $53.0 million at June 30, 2009.

"During the third quarter, we began the first of two planned Phase 3 registration trials for our lead product HEPLISAV(TM) and our goal is to complete these trials within 24 months," commented Dino Dina, M.D., President and Chief Executive Officer of Dynavax. "With our commercialization strategy focused on directly serving high-value markets in the U.S. and a partnering strategy to expand into broader market segments and internationally, HEPLISAV can become a company-building product for Dynavax."

Total revenues for the third quarter 2009 were $2.9 million, compared to $8.9 million reported for the third quarter in 2008. The decline in total revenues for the third quarter was primarily due to a decrease in collaboration revenue following the termination of the Merck & Co., Inc. collaboration for HEPLISAV. Total revenues were $38.1 million for the nine months ended September 30, 2009, compared to $25.1 million for the same period in 2008. The increase in revenues for the nine months ended September 30, 2009 was primarily attributable to the recognition of $28.5 million of non-cash deferred revenue that was accelerated upon the termination of the Merck collaboration.

On a pro forma basis, including collaboration funding from SDI and excluding the non-cash deferred revenue from the Merck collaboration, revenues were $3.9 million and $12.2 million, respectively, for the third quarter and nine months ended September 30, 2009, compared to $9.9 million and $27.9 million for the same period in 2008.

Total operating expenses were $13.6 million for the third quarter 2009, compared to $14.6 million for the third quarter 2008. Total operating expenses were $41.6 million for the nine months ended September 30, 2009, compared to $51.2 million for the same period in 2008. The decrease in operating expenses for 2009 was primarily due to a reduction in clinical development costs associated with HEPLISAV and the discontinuation of development for the TOLAMBA ragweed allergy program in May 2008.

On a pro forma basis, excluding the non-cash charges for stock-based compensation and amortization of intangible assets, operating expenses were $12.5 million and $38.8 million, respectively, for the third quarter and nine months ended September 30, 2009, compared to $13.3 million and $47.9 million for the same periods in 2008.

The tables included as part of this press release provide a reconciliation of GAAP revenues and operating expenses to pro forma revenues and operating expenses.

The net loss of $9.5 million, or $0.24 per share, reported for the third quarter 2009 increased from the net loss of $5.4 million, or $0.14 per share, for the same period in 2008. The increase in net loss for third quarter is due to a decrease in collaboration revenue partially offset by a decrease in total operating expenses. The net loss of $0.3 million, or $0.01 per share, reported for the nine months ended September 30, 2009 significantly improved compared to the net loss of $23.9 million, or $0.60 per share, for the same period in 2008. The improvement in net loss for the nine months ended September 30, 2009 is due to the recognition of non-cash deferred revenue and a decrease in total operating expenses.

HEPLISAV Phase 3 Hepatitis B Vaccine - In a previously completed pivotal Phase 3 trial, HEPLISAV provided increased, rapid protection with fewer doses than current licensed vaccines. To complete the registration trials for HEPLISAV, Dynavax has begun vaccinating chronic kidney disease patients in a Phase 3 trial and expects to begin a Phase 3 lot-to-lot consistency trial in adults over 40 years of age in early 2010. Dynavax will present chronic kidney disease patient data for HEPLISAV at the Infectious Disease Society of America (IDSA) meeting in Philadelphia, Pennsylvania, October 29 through November 1, 2009.

Phase 1b Hepatitis C Therapy - SD-101 is a second generation TLR-9 agonist which is being developed in an ongoing Phase 1b trial funded through the SDI agreement. Dynavax and Symphony Capital are evaluating future development options for this hepatitis C therapy.

Phase 1b Hepatitis B Therapy - In 2009, Dynavax plans to begin a Phase 1b trial of DV-601, the first hepatitis B therapy to combine both surface and core HBV antigens.

Preclinical Programs -- Dynavax's preclinical programs include a unique Universal Flu vaccine and programs partnered with pharmaceutical partners AstraZeneca and GlaxoSmithKline.

Conference Call

Dynavax will webcast a conference call today at 4:30 p.m. EDT (1:30 p.m. PDT). The live and archived webcast can be accessed by visiting the investor relations section of the Company's Web site at http://investors.dynavax.com/newsevents.cfm.

About Dynavax

Dynavax Technologies Corporation, a clinical-stage biopharmaceutical company, discovers and develops novel products to prevent and treat infectious diseases. The Company's lead product candidate is HEPLISAV, a Phase 3 investigational adult hepatitis B vaccine designed to provide more rapid and increased protection with fewer doses than current licensed vaccines. For more information visit www.dynavax.com.

Forward Looking Statements

This press release contains "forward-looking statements," that are subject to a number of risks and uncertainties, including statements relating to planned clinical trials and our commercialization strategy for HEPLISAV. Actual results may differ materially from those set forth in this press release due to the risks and uncertainties inherent in our business, including whether successful clinical and regulatory development and approval of HEPLISAV can occur in a timely manner or without significant additional studies or difficulties or delays in development, whether the studies can support registration for commercialization of HEPLISAV, initiation and completion of clinical trials of the Company's other product candidates; the results of clinical trials and the impact of those results on the initiation and completion of subsequent trials and issues arising in the regulatory process; the Company's ability to obtain additional financing to support the development and commercialization of HEPLISAV and its other operations, possible claims against the Company based on the patent rights of others; and other risks detailed in the "Risk Factors" section of our current periodic reports with the SEC. We undertake no obligation to revise or update information herein to reflect events or circumstances in the future, even if new information becomes available.

Information on Dynavax's website at www.dynavax.com is not incorporated by reference in the Company's current periodic reports with the SEC.

DYNAVAX TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
                                                             Three Months Ended               Nine Months Ended
                                                             September                        September
                                                             30,                              30,
                                                                 2009             2008            2009            2008
Revenues:
Collaboration revenue                                        $   1,791        $   7,960       $   34,079      $   21,435
Grant revenue                                                    887              581             2,921           2,027
Service and license revenue                                      223              316             1,129           1,687
Total revenues                                                   2,901            8,857           38,129          25,149
Operating expenses:
Research and development (1)                                     9,631            10,456          29,202          38,522
General and administrative (2)                                   3,736            3,913           11,693          11,904
Amortization of intangible assets                                245              245             735             735
Total operating expenses (3)                                     13,612           14,614          41,630          51,161
Loss from operations                                             (10,711 )        (5,757 )        (3,501 )        (26,012 )
Interest income                                                  18               313             174             1,461
Loan Forgiveness                                                 --               5,000           --              5,000
Interest expense                                                 (93     )        (6,457 )        (120   )        (9,141  )
Other income (expense)                                           80               (232   )        (40    )        (4      )
Net loss.                                                        (10,706 )        (7,133 )        (3,487 )        (28,696 )
Add: Losses attributed to noncontrolling interest in SDI         1,200            1,713           3,192           4,768
Net loss attributable to Dynavax                             $   (9,506  )    $   (5,420 )    $   (295   )    $   (23,928 )
Basic and diluted net loss per share                         $   (0.24   )    $   (0.14  )    $   (0.01  )    $   (0.60   )
Shares used to compute basic and diluted net loss per share      40,153           39,831          39,990          39,807
(1) Research and development expenses included non-cash
stock-based compensation charges of $0.4 million and $0.8 million
for the three and nine months ended September 30, 2009,
respectively. Research and development expenses included non-cash
stock-based compensation charges of $0.5 million and $1.0 million
for the three and nine months ended September 30, 2008,
respectively.
(2) General and administrative expenses included non-cash
stock-based compensation charges of $0.5 million and $1.3 million
for the three and nine months ended September 30, 2009,
respectively. General and administrative expenses included
non-cash stock-based compensation charges of $0.6 million and $1.4
million for the three and nine months ended September 30, 2008,
respectively.
(3) Total operating expenses excluding non-cash stock-based
compensation charges were $12.7 million and $39.5 million for the
three and nine months ended September 30, 2009, respectively.
Total operating expenses excluding non-cash stock-based
compensation charges were $13.6 million and $48.7 million for the
three and nine months ended September 30, 2008, respectively.

DYNAVAX TECHNOLOGIES CORPORATION
RECONCILIATION OF GAAP REVENUES TO PRO FORMA REVENUES
(In thousands)
(Unaudited)
                                                    Three Months Ended  Nine Months Ended
                                                    September           September
                                                    30,                 30,
                                                    2009     2008       2009      2008
GAAP revenues                                       $ 2,901  $ 8,857    $ 38,129  $ 25,149
ADD:                                                1,009    1,642      2,551     4,605
Collaboration funding incurred under SDI programs
LESS:                                               --       596        28,485    1,879
Non-cash deferred revenue from Merck collaboration
Pro forma revenues (1)                              $ 3,910  $ 9,903    $ 12,195  $ 27,875
(1) These pro forma amounts are intended to illustrate the
Company's revenues including collaboration funding provided for
the SDI programs and excluding certain non-cash items. The
collaboration funding is reflected in the amount attributed to the
noncontrolling interest in SDI in the Company's consolidated
statement of operations, but would have been reported as revenue
if SDI's results of operations were not consolidated with those of
the Company. Management of the Company believes the pro forma
results are a more useful measure of the Company's revenues
because it provides investors the ability to evaluate the
Company's operations in the manner that management uses to assess
the continued progress of operating programs. These pro forma
results are not in accordance with, or an alternative for,
generally accepted accounting principles and may be different from
pro forma measures used by other companies.

DYNAVAX TECHNOLOGIES CORPORATION
RECONCILIATION OF GAAP OPERATING EXPENSES TO PRO FORMA
OPERATING EXPENSES
(In thousands)
(Unaudited)
                                   Three Months Ended          Nine Months Ended
                                   September                   September
                                   30,                         30,
                                   2009          2008          2009          2008
GAAP operating expenses            $     13,612  $     14,614  $     41,630  $     51,161
LESS:                                    916           1,052         2,102         2,488
Stock-based compensation expense
Amortization of intangible assets        245           245           735           735
Pro forma operating expenses (2)   $     12,451  $     13,317  $     38,793  $     47,938
(2) These pro forma amounts are intended to illustrate the
Company's operating expenses excluding certain non-cash charges in
accordance with the financial statements that management uses to
evaluate the Company's operations. These pro forma results are not
in accordance with, or an alternative for, generally accepted
accounting principles and may be different from pro forma measures
used by other companies.

DYNAVAX TECHNOLOGIES CORPORATION
SELECTED BALANCE SHEET DATA
(In thousands)
                                                                     September 30,        December 31,
                                                                     2009                 2008
Assets                                                               (unaudited)
Cash and cash equivalents and marketable securities (1)              $         46,432     $         68,476
Property and equipment, net                                                    8,507                9,510
Goodwill                                                                       2,312                2,312
Other intangible assets, net                                                   1,524                2,259
Other assets                                                                   2,869                8,066
Total assets                                                         $         61,644     $         90,623
Liabilities and stockholders' equity
Accounts payable                                                     $         1,037      $         905
Accrued liabilities                                                            7,356                6,816
Current portion of deferred revenue                                            3,127                33,133
Noncurrent portion of deferred revenue                                         17,440               18,512
Liability from Program Option exercised under the SDI collaboration            15,000               15,000
Other long-term liabilities                                                    160                  101
Stockholders' equity                                                           17,524               16,156
Total liabilities and stockholders' equity                           $         61,644     $         90,623
(1) These amounts also included investments held by SDI of $21.7
million and $25.1 million as of September 30, 2009 and December
31, 2008, respectively.

SOURCE: Dynavax Technologies Corporation

Dynavax Technologies Corporation 
Jennifer Lew, 510-665-7217 
Vice President, Finance 
jlew@dynavax.com 
Amy Figueroa, 510-665-7211 
Investor Relations & Corporate Communications 
afigueroa@dynavax.com