Dynavax Technologies Corporation

Good day, ladies and gentlemen, and welcome to the Dynavax Technologies third quarter 2020 conference call. As a reminder, this conference call is being recorded. At the end of the company's prepared remarks, we will open the call for questions and provide specific instructions at that point. I would now like to turn the call over to Nicole Arndt, Senior Manager, Investor Relations. You may begin.

Thank you, Alex. Good afternoon. Welcome to the DynaVax Third Quarter 2020 Financial Results and Corporate Update Conference Call. Joining me on the call today are Ryan Spencer, Chief Executive Officer, Michael Ostrock, Chief Financial Officer, Rob Jansen, Chief Medical Officer, Don Casal, Vice President Commercial. Before we begin, I advise you that we will be making forward-looking statements today. including statements regarding headless SB commercial profile, revenue expectations, potential peak revenue, the completion of post-marketing studies, and regarding vaccine development potential with CPG 1018 and revenue expectations. These statements are subject to a number of risks and insurgencies that could cause actual results to differ materially. These results are summarized in today's press release and are detailed in the risk factors section of our current 10Q and 10K periodic reports filed with the SEC, which we encourage you all to review. I will now turn the call over to Ryan Spencer, CEO of Dynavax.

Thank you, Nicole, and thank you all for joining us today. I'm very excited to share our exceptional results for the third quarter, as well as a bright outlook for the coming year. Now, today, we're going to focus on discussing the details of the best quarter of HEPA-Sav-B sales since launch, as well as the significant value being generated by our advanced vaccine adjuvant, CPG-1018, in our COVID-19 vaccine collaboration programs. The continued progress of HEPLISAV-B, along with a pipeline of opportunities emerging from CPG1018, positions us well for both short-term and long-term growth. The current global pandemic has highlighted the need for continued development of new or improved vaccines to help prevent the spread of infectious diseases. Adjuvants potential to boost the immune response to increase protection and to provide longer-lasting immunity are an important contributor to the success of vaccines. Additionally, it is often the case that patients with the greatest risk of severe disease are unfortunately less responsive to vaccines due to a weakened immune system brought on from advanced age or other chronic health conditions. Vaccine adjuvants play a critical role in addressing these patient populations. Our first commercialized product HEPLISAV-B, approved by the U.S. FDA, is an adult hepatitis B vaccine, which is adjuvanted with CPG1018. Hepatitis B is a highly infectious and potentially deadly virus with increasing infection rates. Over 250 million people worldwide and 150,000 people in the U.S. are infected with hepatitis B. Thankfully, it can be prevented with an effective vaccination. Now, challenges with compliance for legacy three-dose products are well known, with only approximately 22% to 54% of patients completing the three-dose regimen over the required six-month period. Hepatitis B is the only two-dose adult hepatitis B vaccine that has been approved by the FDA, and it offers protection in just one month compared to six months for the competitor product. On top of the speed of protection, it has demonstrated higher rates of protection in head-to-head clinical studies compared to the three-dose, six-month regimen of the current market leader. HEPLOSAB-B's two-dose, one-month regimen, with the corresponding improvement in compliance and higher levels of protection, gives us confidence HEPLOSAB-B will become the standard of care for adult hepatitis B vaccination in the US. COVID-19 continued to disrupt the vaccine market in the third quarter. The total adult hepatitis B market had about a 25% reduction in utilization from the same period last year. This COVID-19 impact varied depending on the segment. So, for instance, the Department of Defense segment actually increased 16% from the same period last year. Integrated delivery networks, hospital systems, and clinics continued to see a decrease in utilization, down approximately 35% from the same period last year. Heplicev-B enjoyed a very strong quarter despite this challenging environment. We reported our highest quarterly revenue since launch with net product revenue of $11.6 million. This performance was driven by exceptional progress in national accounts and increased market share in our field-targeted accounts, which grew to 23 percent in the third quarter. Our commercial team has maintained a high level of engagement with targeted accounts and decision makers. In addition to the growth of market share in field-targeted accounts, the team successfully converted a large national retailer that stocked HEPA-SAB-B in over 2,000 locations, resulting in approximately $1 million in revenue for the third quarter. While this inventory build will likely limit revenue from this customer in the fourth quarter, we expect that Heblisav B will be its preferred or exclusive adult standalone hepatitis B vaccine going forward, which would result in high-value recurring revenue in future quarters. As I mentioned earlier, the Department of Defense saw an increase in utilization in the third quarter compared to the same period last year. Third quarter historically has represented the periods of highest utilization in this segment due to a surge in new recruits over the summer months. In addition to the third quarter surge, several bases used end of fiscal year budget surplus to stock in doses at the end of September for use in the fourth quarter, which resulted in strong demand in the DoD segment in the third quarter. We continue to make significant progress in this segment, Having already converted four of the nine new recruit bases, we hope to finalize the conversion of another base in the fourth quarter, which would result in capturing its utilization for all of 2021. Overall, we are delighted to see such a strong quarter for Heplis FB, despite the challenges of the COVID-19 environment. Now, moving on from Heplis FB to our second asset, CPG1018, where we have a new line of business that is growing rapidly as a result of our efforts to support the global response to the COVID-19 pandemic. We've embarked on a global strategy to establish a portfolio of collaborations aimed at demonstrating the capability of CPG1018 to enhance the immune response to a variety of vaccine antigens. Our open collaboration approach allows us to support multiple vaccine development efforts. And underscoring CPG1018's versatility, these collaborations span multiple technology approaches across varied indications. We've established collaborations focused on developing adjuvanted vaccines, currently including COVID-19, universal influenza, and Tdap, which is tetanus, diphtheria, and acellular pertussis. which is specifically focused on improving the immune response to the acellular pertussis component of that vaccine. The global effort to develop coronavirus vaccines offers the first demonstration of the value of CPG1018 beyond teplizapb. We have built a broad portfolio of collaborations for coronavirus vaccines to address the complex aspects of development and competition in this space. Our portfolio approach, provides multiple opportunities for CPG1018 to be a valuable component of different vaccines, recognizing that not every collaboration will move forward to an approved vaccine. We continue to expand our collaborations with a goal of ensuring CPG1018 is evaluated in the widest possible range of approaches. We believe by targeting different technologies, we will create the best opportunity for long-term value creation as the field continues to evolve. Now digging deeper into one of our key collaborations, as many may already know, we entered into an agreement to develop an adjuvanted vaccine for COVID-19 with Valneva. Subsequently, Valneva entered into a supply agreement with the UK government for Valneva's adjuvanted vaccine. During the third quarter, we executed a commercial supply agreement with Valneva and began production of CPG1018 at the increased scale for pandemic supply. Under this agreement, Dynavax will provide Valneva with CPG1018 to produce up to 190 million doses of vaccine over a four-year period. In 2021, Dynavax will supply Valneva CPG1018 adjuvant for the first 60 million vaccine doses. Bonneva also has the option to purchase CPG-1018 to produce an additional 40 million doses in 2021. Under this contract alone, we have the potential for approximately $130 to $230 million of CPG-1018 revenue in 2021, which will begin to be recognized starting in the first quarter. While this contract is contingent on continued successful development, it is potentially worth over $400 million for DynaVax through 2024. In addition to Balneva, our collaborations with Clover Biopharmaceuticals continues to make good progress. Based on positive phase one data to date, Clover has indicated that it intends to develop two adjuvanted COVID-19 vaccine programs to fully utilize their available antigen production capacity. and that it anticipates initiating a pivotal clinical trial with CPG1018 to address global demand. We expect Clover to report the results of their phase one study as well as their plans for continued development by year end. In summary, we've made significant progress on a number of fronts in the third quarter. The strength of the third quarter revenue for HEPLISAB-B combined with the initial revenue generation from CPG1018 reinforces our confidence in the Dynavax vaccine business model and the long-term investment opportunity it represents. I will now turn the call over to Michael to discuss our financial results in more detail. Michael?