The biotech sector hasn’t had the best of years. The controversy over Mylan NV (NASDAQ:MYL) this past month, coupled with Hillary Clinton’s impromptu vow to curb price gouging, has clobbered the iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB). But after the long holiday weekend, the IBB is perking up on big buyout news.
Executive Editor Jeff Reeves pointed to a handful of biotech players that could be bought out next. The market sure seems to think Dynavax Technologies Corporation (NASDAQ:DVAX) is one such player. DVAX stock is up by 28% as of this writing.
Plenty of Potential in DVAX Stock
If you were thinking you missed the run-up in DVAX, think again. Shares of Dynavax still are are down by more than half over the past year.
Even after today’s pop, DVAX is still down about 17% over the past five days. That’s largely thanks to the Food and Drug Administration canceling an advisory committee meeting for Dynavax’s hepatitis B vaccine, Heplisav.
While Dynavax isn’t profitable yet, it has some promise.
Dynavax bills itself as a clinical-stage biopharmaceutical, developing vaccines and therapeutics to treat autoimmune and inflammatory diseases and even cancer. Its Toll-Like Receptor (TLR) technology is described as “cutting edge” and is used to develop its immunotherapies.
TLRs exist at a cellular level and are used to detect and react to viruses, bacteria and other pathogens. Dynavax’s technology basically activates specific TLRs to stimulate an immune response, which aids in the effectiveness of its vaccines and treatments. And DVAX has five treatments in various stages of clinical development, including its hepatitis B vaccine and cancer immunotherapy. Its hepatitis B vaccine, Heplisav, could generate sales of $775 million.
With a market capitalization of only $370 million, Dynavax could easily be bought out by one of the larger biotechs looking to get their hands on Heplisav and the company’s TLR tech. And at $13.57, DVAX has 160%-plus upside to the median analyst target of $35.30. That means there’s plenty of reward left even after today’s gains, especially if Heplisav gets FDA-approval.
Just remember: The biotech space is highly volatile, and that’s reflected in the DVAX stock price in 2016.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.