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Goldman Sachs Downgrades Dynavax on Competitive Pressures in Shingles and Hepatitis B Markets

• Goldman Sachs has downgraded Dynavax Technologies to Sell from Neutral, reducing price target to $12 amid growing competition in the shingles vaccine market and uncertainties around Z-1018 program.

• Dynavax's HEPLISAV-B showed strong performance with preliminary 2024 net product revenue of $268 million, up 26% year-over-year, despite regulatory challenges with its four-dose regimen.

• GSK's Shingrix advancement with pre-filled syringes, under FDA and EMA review, poses additional competitive challenges to Dynavax's market position.

Goldman Sachs has issued a bearish outlook on vaccine manufacturer Dynavax Technologies Corporation, downgrading the stock to Sell from Neutral and reducing the price target from $15 to $12. The decision reflects mounting competitive pressures and market uncertainties affecting the company's key vaccine programs.

Market Competition and Development Challenges

Paul Choi, Goldman Sachs analyst, highlights intensifying competition in the shingles vaccine market as a primary concern. This competitive landscape could potentially diminish the value proposition of Dynavax's Z-1018 program, currently in Phase 1/2 trials. The study, involving 441 healthy adults aged 50 to 69, aims to evaluate Z-1018's safety, tolerability, and immunogenicity against GSK's established Shingrix vaccine.
Adding to competitive pressures, GSK has advanced its Shingrix offering with pre-filled syringes, a development currently under review by both the FDA and European Medicines Agency. The FDA's decision is expected by June 20, potentially strengthening GSK's market position through improved administration convenience.

HEPLISAV-B Performance and Regulatory Landscape

Despite competitive challenges, Dynavax's HEPLISAV-B vaccine has demonstrated robust commercial performance. Preliminary figures show net product revenue reaching $268 million for 2024, marking a 26% increase year-over-year. The fourth quarter was particularly strong, with revenue of $71 million, representing a 39% growth.
However, regulatory hurdles persist. In May 2024, the FDA issued a Complete Response Letter regarding HEPLISAV-B's four-dose regimen application, citing insufficient data for full safety and effectiveness evaluation. This regulatory setback, combined with questions about future FDA and ACIP stances on vaccines, adds uncertainty to the product's long-term outlook.

Financial Outlook and Market Response

Dynavax is scheduled to report its fourth-quarter earnings on February 20. Analysts project Q4 adjusted earnings per share of $0.04 and sales of $72.92 million. For the full year 2024, market expectations include sales of $278.13 million and adjusted earnings per share of $0.12.
The market has responded negatively to Goldman's downgrade, with Dynavax shares declining 4.13% to $12.66. Looking ahead, Choi expresses concerns about the demand for repeat hepatitis B vaccinations in the 2030s, potentially impacting HEPLISAV-B's performance beyond its peak sales period.
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