Despite the labor day halt in the US, the end of the week last week brought with it plenty of volatility, and as we move into the start of a fresh week’s trading out of the US on Tuesday, it looks as though we are set for plenty more action going forward. Biotech refuses to slow down, and with the summer lull drawing to a close, things are only going to get more heated as we head into the close of the third quarter and beyond. With this in mind, here are two of the companies to keep an eye on this week, and what’s driving the volatility in each. The two companies in focus are Threshold Pharmaceuticals, Inc. (NASDAQ:THLD) and Dynavax Technologies Corporation (NASDAQ:DVAX).
We’ll kick things off with Threshold Pharmaceuticals, Inc. (NASDAQ:THLD).
This one is a bit of a loose move, in the sense that there’s nothing solid that has directly moved the stock, but it’s more anticipatory action. Threshold closed out Friday’s session at $1.21 a share, a 15% gain on the day’s open, despite no real direct news hitting press and no major developments in the space drawing collateral speculative volume to the company. Volume reached more than five times average daily 3 months, and based the close bid we expect further upside momentum at the Tuesday open.
So what’s driving the action?
For those not familiar with the company, threshold is an oncology outfit with two primary targets – lung cancer (specifically NSCLC) and head and neck cancer. It’s targeting both indications with what’s called a hypoxia activated prodrug named Tarloxotinib. Basically, it releases a substance that inhibits EGFR, and this stops the replication and proliferation of cancerous cells in solid tumors – at least, theoretically.
The drug is in a phase II trial for both of the above mentioned indications as we speak, and both are set for topline at some point during September. This topline release is what markets are looking at as the driver behind their buy bias, and is what is driving the action as we head into early September.
This one has been dragging on for a while now. Dynavax is trying to get a hepatitis vaccine called Heplisav approved, but the approval date keeps getting pushed back by the agency. Early stage suggestions that there might be some safety concerns surrounding the vaccine – specifically relating to the potential for causing autoimmune diseases, drove the FDA to request more data from the company. Dynavax picked up a fresh trial and collected, then submitted a batch of fresh safety data to the FDA in March. In response, the agency pushed back the PDUFS from April to December, and set up an advisory panel review meeting for mid November.
At the end of last week, the company announced that the FDA had cancelled this meeting, citing the necessity for more time to assess the data that Dynavax submitted.
Markets have sold off on the delay, as a combination of both expectations that the delay is a bad sign for the drug’s chances of approval and that Dynavax is going to have to spend more cash to carry it through to the point where it can start generating revenues from the vaccine weighs on sentiment.
We think this is a bit of an oversell, and that markets should even up on the announcement going forward.