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Dynavax may have to repitch hepatitis B vaccine for smaller market

A view shows the U.S. Food and Drug Administration (FDA) logo at the lobby of its headquarters in Silver Spring, Maryland August 14, 2012. R
A view shows the U.S. Food and Drug Administration (FDA) logo at the lobby of its headquarters in Silver Spring, Maryland August 14, 2012. R

By Zeba Siddiqui

(Reuters) - Dynavax Technologies Inc may need to repitch its hepatitis B vaccine for a smaller patient population, after U.S. health regulators declined to approve the vaccine for adults - an estimated $700 million global market.

The U.S. Food and Drug Administration said the safety data provided by the company was insufficient to support an approval of Heplisav - Dynavax's most advanced clinical candidate.

The company said in a statement earlier on Monday that the FDA had indicated its willingness to discuss a more restricted use of the vaccine. It said it expects to meet with the FDA within six weeks to discuss Heplisav's approval.

The rejection, which potentially delays the market entry of a faster-acting and less frequently needed vaccine for the liver-attacking infection, sent the company's shares down 37 percent to $1.87 on Monday, their lowest in more than a year.

However, Dynavax said on a conference call with analysts that it may not need to conduct additional tests to assess the safety of its vaccine.

"It isn't going to be an instantaneous turnaround. We are going to have to do some work to assemble all (the data) and make sure that it fits the FDA's requirement. Let's just say we're talking in months and not years," Tyler Martin, Dynavax's president and chief medical officer, told analysts on the call.

Cowen & Co analyst Phil Nadeau said the approval of Heplisav within a limited population may still be possible late this year or the first half of the next year.

However, MLV & Co analyst Megan McCloskey Dow cut her rating on Dynavax's stock to "hold" from "buy" citing uncertainty regarding the need for additional studies for Heplisav's approval in the United States.

She added that Dynavax, which filed with European health regulators last July for approval of Heplisav in adults with chronic kidney disease, may secure a nod in that region by the first quarter of next year.

Dynavax pitched Heplisav in the United States for use in patients between 18 and 70 years of age, and the vaccine showed promising efficacy in clinical studies after the administration of just two doses.

GlaxoSmithKline Plc's Engerix B - the most widely used hepatitis vaccine in the world - requires three or four doses in adults.

"There are a few possibilities - one is for adults 40 to 70 years of age, because in these older adults, the immune system is more compromised, so they benefit more from Heplisav," William Blair & Co analyst Katherine Xu said.

The company could also explore seeking approval for at-risk hepatitis B populations such as patients with HIV, HCV, diabetes and those on dialysis, Xu added.

An estimated 3.5 million to 5.3 million people are living with viral hepatitis in the United States, and vaccination is crucial as it prevents progression of the infection, which is the leading cause of liver cancer.

SAFETY RISKS

The FDA noted that the novel adjuvants in Heplisav may cause rare autoimmune events, Dynavax added.

Adjuvants are added to vaccines to improve their ability to trigger an immune response, but they carry the risk of causing several potentially fatal adverse reactions.

The FDA also sought clarifications on the manufacturing controls and facilities related to quality assurance of the commercial product, Dynavax said on Monday.

CMO Martin said on the call that the company would have to do "some limited additional amount of work" at some of its facilities to provide FDA with the requested data.

The FDA echoed the concerns expressed in November by an advisory committee that recommended against Heplisav's approval and asked for data from a more diverse study population. The advisors, however, voted unanimously to support the vaccine's efficacy.

The company is currently testing a few other clinical candidates in collaboration with British drug giants Glaxo and AstraZeneca Plc, including potential treatments for asthma and anti-inflammatory disorders such as rheumatoid arthritis and lupus.

(Editing by Roshni Menon)

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