U.S. Markets open in 7 hrs 29 mins

Why Dynavax Technologies Cratered in February

George Budwell, The Motley Fool

What happened

Shares of Dynavax Technologies (NASDAQ: DVAX) , a vaccine and immuno-oncology specialist , dropped by 15.9% last month, according to data from S&P Global Market Intelligence . What sparked this sell-off?

Dynavax's stock tanked after the company reported its fourth-quarter and full-year results toward the end of February. While the biotech actually beat Wall Street's consensus estimate on revenue for the fourth quarter, investors were apparently hoping the company would announce a partnering deal in immuno-oncology revolving around the TLR9 agonist SD-101. Unfortunately, management only noted during the accompanying conference call that the company is "in discussions with a number of pharmaceutical companies to explore the broadening and deepening of our immuno-oncology clinical program."

Businessman appearing to panic while staring at a downward trending series of bar graphs held by a pair of giant hands.

Image source: Getty Images.

So what

Dynavax has been burning through about $40 million per quarter over the last year. At that rate, the company will probably be forced to issue a large secondary offering before the end of 2019 -- that is, unless it can attract a deep-pocketed partner to help pay for the development of its immuno-oncology pipeline.

Now what

Dynavax's decision not to issue a revenue projection for 2019 also didn't help matters. Since its hepatitis vaccine, Heplisav-B, could extend the biotech's cash runway by perhaps a whole quarter if Wall Street's more optimistic estimates are correct, investors clearly wanted the company to roll out some type of forward-looking sales projection for this product. Instead, management decided to play it safe and simply say that Heplisav-B should be "profitable" by year's end.

All told, Dynavax's main value drivers -- Heplisav-B and its immuno-oncology pipeline -- are both making steady progress and that fact should reassure shareholders. But this early commercial-stage biotech stock is likely to remain volatile until the company's long-term capital needs are met.

More From The Motley Fool

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .