Here’s What’s Next For Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) and Dynavax Technologies Corporation (NASDAQ:DVAX)

Two companies have logged strong starts to the week in the biotech space so far, and both are moving on FDA driven catalysts. Here’s a look at these two companies, what’s moving them, and what’s next for both.

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The two companies in focus are Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) and Dynavax Technologies Corporation (NASDAQ:DVAX).

So, let’s kick things off with Lexicon. This one is a relatively straightforward move. The company ran up close to 8% after hours on Tuesday, with the run rooted in an update from Lexicon regarding the one of its assets – Xermelo. It’s a 250 mg oral administration drug, targeting a condition called carcinoid syndrome diarrhea. For those not familiar with the condition, carcinoid syndrome is what’s called a paraneoplastic syndrome (pareneoplastic here relates to the presence of a secondary condition that comes about as the result of a cancer presence, but that isn’t directly related to tumor cells) comprising the signs and symptoms that occur secondary to carcinoid tumors. The syndrome includes flushing and diarrhea, and, less frequently, heart failure and bronchoconstriction.

So, the drug was up for approval on the back of an NDA, and the latest news reported that the agency has given the drug a green light for commercialization. It’s a bit of a sigh-of-relief situation for shareholders, after the FDA said last September that it needed more time to consider the application. Many saw this as a sign of bad things to come, and Lexicon sentiment took a hit. Anyway, the issue is now resolved, and and sentiment shift seen on the back of the delay is reversing, and reversing quickly.

We expect this one to pick up further strength as the week matures. It’s not a blockbuster market, but analysts think that there’s the potential for around $500 million in annual sales at peak for the asset, and weighed against Lexicon’s current market cap of a little over $1.6 blilion, and current quarterly revenues (at September 30) of just shy of $30 million, it’s a potential game changer in this instance.

So, moving on, let’s look at Dynavax.

As mentioned, this one is also an FDA driven catalyst, but not an approval. Instead, we’ve got an FDA acceptance of a resubmission for a Biologics License Application (BLA) that Dynavax has had some trouble with over the last twelve months – an application for approval for a drug called HEPLISAV-B. Many reading will likely already be familiar with the asset we’re talking about. For those that aren’t, however, it’s a drug targeting hepatitis B infection, and specifically, a preventative virus in the space. It’s a type of vaccine that combines hepatitis B surface antigen with a proprietary Toll-like Receptor 9 agonist to enhance the immune response, and theoretically, at least, offer an improvement over the immunogenicity of the currently available therapies.

Data showed that the vaccine is effective, and reasonably well tolerated, but last November, the FDA issued a complete response letter (CRL) to Dynavax based on the initial BLA. According to the release that detailed the CRL, the letter requested information regarding several topics, including clarification regarding specific adverse events of special interest (AESIs), a numerical imbalance in a small number of cardiac events in a single study (HBV-23), new analyses of the integrated safety data base across different time periods, and post-marketing commitments.

That’s a pretty hefty letter, and markets were particularly bearish in their interpretation of its issuing when announced.

The recent news, however, suggests that there may finally be a clean path through to commercialization for the embattled vaccine maker and its lead hepatitis asset. We don’t know to what degree Dynavax was able to address each of the points of concern on the above discussed CRL, but that the FDA has accepted it for reconsideration means that the issues are – at surface level – addressed, and that the agency now deems the application at least viable for approval. That’s not to say it’s a shoo-in for a green light, of course, but it’s now got a real shot at one.

So what’s next here?

Well, Dynavax is up more than 30% on the news, and we expect this one (as with Lexicon) to keep running up near term. The PDUFA for the drug is set at August 10, so that’s the data to watch longer term.

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