Dynavax Technologies Corporation

Good day, ladies and gentlemen, and welcome to the Dynavax Technologies fourth quarter and full year 2023 Financial Results Conference call. As a reminder, this call is being recorded. At the end of the company's prepared remarks, we'll open the call for questions and provide specific instructions at that time. I would now like to turn the call over to Paul Cox, Vice President, Investor Relations and Corporate Communications. You may begin.

Thank you for participating in today's call. Joining me from Dynavax are Ryan Spencer, Chief Executive Officer, Don Casale, Chief Commercial Officer, Rob Jansen, Chief Medical Officer, and Kelly McDonald, Chief Financial Officer. Earlier today, Dynavax released financial results for the fourth quarter and full year ended December 31st, 2023. Copies of the press release and a supplementary slide presentation are available on Dynavax's website. Before we begin, I advise you that we will be making forward-looking statements today based on our current expectations and beliefs, including but not limited to potential market sizes, market segmentation, effective marketing efforts, future expected market share and related growth rates, and related ACIP recommendation impact on each. Financial guidance and trends, including revenue, profitability, cash flow, and sufficiency of current capitalization, timing and results of FDA submissions, clinical trial starts and data readouts, and potential future uses of or demand for our CPG-1018 adjuvant. These statements involve risks and uncertainties, and our actual results may differ materially. These risks are summarized in today's press release and detailed in the risk factors section of our SEC filings, including today's annual report on Form 10-K. Our forward-looking statements speak as of today, and we undertake no obligation to update such statements. And with that, I will now turn the call over to Ryan.

Thanks, Paul. Good afternoon, everyone, and thank you for taking the time to join us to review DynaVax's results for 2023. 2023 was characterized by record revenue growth for Apple 70, delivering 69% growth year-over-year, and becoming the market share leader in the two largest growth segments, which are retail pharmacies and integrated delivery networks, making HEPA-7B the leading vaccine in the US adult hepatitis B vaccine market. We expect 2024 to be an important year in building our vaccine portfolio of best-in-class products, including further growing the HEPA-7B brand and advancing our pipeline programs into clinical trial initiations and data readouts. For HEPA-7B, We are again forecasting continued growth with net product revenue in the range of $265 to $280 million for the year. In a few minutes, Don will provide some additional commentary on how the U.S. hepatitis D vaccine market is evolving due to an active winter respiratory disease season and why we continue to be very confident in another year of growth for the brand and in the long-term prospects for HEPA-Sev-B in a vaccine market with one of the largest total addressable populations in the United States. For our development pipeline, we expect to achieve important milestones in the coming months, including our PDUFA action date for the HEPA-Sev-B SPLA for hemodialysis expected in May, clearing our shingles IND currently being reviewed by FDA to begin our Phase I-II trial, advancing our Tdap program, and delivering Phase II clinical and non-human primate challenge study data for our plague program under collaboration with the U.S. Department of Defense. Importantly, our strong financial position of $742 million of cash provides us with the optionality to continue to build value across our business, such as through incremental investments to drive the MLSMB market opportunity, continuing to advance R&D efforts, and pursuing new opportunities to accelerate our growth. As we've discussed previously, we continue to evaluate strategic opportunities to further diversify our clinical and commercial product portfolio. We remain committed to discipline capital allocation to generate significant value and accelerate growth. We look forward to providing updates on these efforts in the future. I'll now turn the call over to Don to provide more details on the HEPA-CEP results and our guidance looking forward. Thank you, Ryan. In 2023, we achieved record net product sales and market share, establishing Hepatitis B as the leading adult Hepatitis B vaccine in the U.S. market. Additionally, we drove significant Hepatitis B market growth by effectively pulling through the ACIP universal recommendation. Our success in 2023 reaffirms our confidence in a sizable market opportunity and long-term revenue growth potential for Hepatitis B. The U.S. adult hepatitis B market continued to grow in 2023 following the ACIP universal recommendation for hepatitis B vaccination, which now represents one of the largest vaccine market opportunities for adults. We believe this recommendation will continue to be a significant catalyst for growth and estimate the hepatitis B vaccine market opportunity for HEPA-SAB grew to approximately $525 million in 2023, on a clear path to approximately $800 million by 2027, with Hempelstab B achieving a majority market share by that time. During the fourth quarter, we continued to see indicators of U.S. market expansion from the ACF universal recommendation. Despite softness in the market related to reduced wellness visits and an increased focus by healthcare providers on respiratory disease vaccines, including typical flu campaigns and the launches of RFC and endemic COVID-19 vaccines. HEPLIS FB continues to increase its total U.S. market share, achieving 42% at the end of 2023, compared to 35% at the end of 2022. Net product revenue in 2023 grew 69% year over year. This sales growth continues to be driven by HEPLIS FB's strong performance in two critical segments. retail pharmacy, and integrated delivery networks, or IDNs. We continue to focus our sales and marketing efforts on the retail pharmacy and IDN segments, as we expect to see most of the anticipated market growth from the ACIP Universal Recommendation in these segments, estimating both will grow to represent over 60% of the total hepatitis D market by 2027. Headless IB is now the market share leader in both of these key segments. For IDNs, at the end of the year, Headless IB's market share increased to approximately 56% compared to approximately 47% at the end of 2022. We are focused on working with large health systems at the C-suite and clinic level to pull through ongoing adoption of the universal recommendation. Customers continue to respond positively to the ACIP change and recognize the need to adopt and implement the recommendation. Full-year hepatitis B vaccine market growth in the IDN segment was 41%. In the retail pharmacy segment, we have made significant progress in several large national chains, making hepatitis B the preferred adult hepatitis B vaccine. At the end of the year, hepatitis B achieved approximately 58% market share in the retail pharmacy segment, compared to approximately 42% at the end of 2022. We continue to see and expect significant growth from the retail pharmacy segment. Full-year hepatitis B vaccine market growth was 78%. As Ryan noted, we are providing full-year 2024 net product revenue guidance for hepatitis B to be in the range of $265 to $280 million. This guidance reflects our momentum in the market while factoring in the evolving market landscape and emerging quarterly patterns of non-respiratory vaccination that we expect to see in 2024. Based on feedback from customers, cough, cold, and flu season has extended much further into January than expected, reducing the number of wellness visits and vaccination opportunities. Due to the softness in January, we anticipate little to no growth in the hepatitis B vaccine market for Q1 as compared to Q4 of 2023. Encouragingly, we expect the market to strengthen for the remainder of Q1 into Q2 as the focus of healthcare providers and retail pharmacy shifts back to prioritizing non-respiratory vaccines. As a result, we expect to recognize up to 60% of our full-year revenue range in the second and third quarters, with typical Q4 seasonality expected. We are extremely confident in the long-term expansion of the US hepatitis B vaccine market and forecast annual market growth of approximately 10 to 15% over the next several years, with Hepatitis B gaining meaningful increases in total market share over that time. In summary, we had a tremendous 2023, reaffirming our confidence that Hepatitis B will strengthen its position as a clear market leader in the expanding Hepatitis B vaccine market. We are very proud of our commercial team's execution and encouraged by the progress and momentum for Hepatitis B, establishing a majority market share in the key segments of retail pharmacy and IDN. I will now turn the call over to Rob to take you through our clinical pipeline.