West Coast Editor
On the heels of favorable data with its ragweed allergy drug, Dynavax Technologies Corp. plans a transaction related to another indication that’s nothing to sneeze at, paying $12 million in cash to acquire Rhein Biotech GmbH, the supplier of hepatitis B virus surface antigen for Dynavax’s Phase III HBV vaccine, Heplisav.
Dynavax’s stock (NASDAQ:DVAX) fell 10 cents Tuesday to close at $6.29.
Expected to close in the second quarter, the deal gives Dynavax control of a European Union GMP-certified vaccine making facility, as well as the ability to produce the HBV surface antigen and potentially others.
Rhein is 93 percent owned by Berna Biotech AG, the Berna, Switzerland-based firm recently acquired by Crucell NV, of Leiden, the Netherlands, in an estimated $448 million deal. Novartis AG, of Basel, Switzerland, had said it would not pursue a bid for Berna Biotech, which left the way clear for Crucell. (See BioWorld Today, Dec. 2, 2005.)
"When Berna was acquired, we understood the Rhein assets might be available," said Jane Green, vice president of corporate communications for Berkeley, Calif.-based Dynavax.
"They’re of greater value to us than they are to Crucell, and things took shape very rapidly," because all parties saw the sense of the deal, she added.
Rhein has 45 people, "all of whom are doing vital work, and we’re looking forward to integrating them," Green said, and the firm will continue to operate as a wholly owned subsidiary in Dusseldorf, Germany.
Dynavax expects that ongoing revenue from the industrial services business of Rhein, plus cost synergies from the combined operations and the subtraction of payments to Berna for Heplisav, will offset near-term operating expenses for Rhein. In the long term, cost of goods for Heplisav and doing away with the prior licensing and supply deal should allow Dynavax to recover the acquisition costs.
"At this early stage, it’s going to be difficult to quantify," Green said. "We haven’t provided that much visibility into our own operations. We know this is disappointing to investors, and we just need a little time" to firm up the numbers.
More insight will be available at the end of next month, she said.
As part of the deal, Rhein retains an option to certain co-development and commercialization rights for its own HBV vaccine, Supervax, in Europe and Asia. Supervax, approved in Argentina as a pilot market, combines Seattle-based Corixa Corp.’s synthetic RC-529 adjuvant with the Hansenula polymorpha-based recombinant hepatitis B antigen.
"We’re very interested in this," Green said. Supervax could work well as a two-dose vaccine for healthy adults, the "first-responder population," she said, and Dynavax would come up with "very rational, differentiated pricing strategies" for Supervax and the other HBV product, Heplisav.
"Were interested in starting a Phase III trial [with Supervax] in Europe," Green said, which will happen "in the near term."
Heplisav entered its first study in June, involving 400 patients ages 40 to 70 with no detectable HBV antibodies, a population that is especially hard to immunize, and will take place at study sites in Singapore, Taiwan, Korea and the Philippines. A second trial is expected to begin this year.
Heplisav emerged from the company’s Toll-like receptor 9 platform, which also yielded the ragweed allergy drug. Called Tolamba, the allergy compound links a TLR-9 agonist with the allergen and teaches the immune system to recognize the allergen as a virus or bacteria, causing a Th1 response.
At the start of this year, Tolamba sent Dynavax’s stock on a 34 percent upward ride following news that data from a Phase II/III trial showed significant reduction of symptoms over placebo. (See BioWorld Today, Jan. 20, 2006.)
"We’re trying to exercise all of our muscles at this point," Green said.