Dynavax Technologies (NASDAQ:DVAX) stirred the pot on Monday with news that the FDA would be rounding up a Vaccines and Related Biological Products Advisory Committee (VRBPAC) panel to review the biotech firm's Hepatitis B vaccine Heplisav. The HBV drug is about to be put under the spotlight this summer as the panel will take a fresh look at DVAX's resubmitted biologics license application (BLA) on July 28 with the PDUFA date for Hepsilav to follow just two brief weeks later on August 10.

William Blair analyst Y Katherine Xu is riding the bullish train full steam ahead on the firm, confident that Hepsilav's chance to make a case for a green light will proceed swimmingly, going as far as to wager 70% probability for approval.

As such, the analyst reiterates an Outperform rating on shares of DVAX with a fair value of $17, which implies just under 218% upside from where the shares last closed, as she anticipates once the approval is under way, a commercial partnership could bring the firm 45% royalties on all the drug's sales, with peak domestic sales to hit $650 million. From Xu's eyes, DVAX's immune-oncology programs are irons in the fire that present upside to the stock, a further reason to be bullish on Dynavax's future.

Yet, it is worth noting this will not be DVAX's first rodeo trying to approve its lead vaccine candidate. In November of last year, the FDA issued its second CRL to the drug on back of adverse events, preceded by a first CRL dealt in 2013 following an unfavorable panel. Dynavax has taken steps to address the CRL setback and the FDA received the firm's response this February, which set off a review period spanning half a year and a PDUFA date tagged for August. Though the analyst acknowledges the blip of time between the panel to the PDUFA date seems "uncommonly short," the firm pointed to "logistical difficulties" with regards to panel scheduling.

"A key issue for the panel is likely to be the nature of certain cardiovascular events in the safety database," pinpoints the analyst, highlighting a numerical imbalance seen in the safety database in non-severe cardiac events, a reaction to the comparator arm experiencing less events than might be anticipated considering the population's age and even its co-morbidities, such as a patient pool where 12% are diabetic.

Though Xu approaches this with open eyes, she remains unfazed in her confident slant, explaining, "We believe Dynavax was tripped up in the last review cycle by the FDA requiring additional analysis of these events, so this will likely be an important topic of discussion at the panel. From our discussions with management, we are comfortable that the numeric imbalance can be explained by the unusual performance of the comparator arm, and remain cautiously optimistic that the discussion of these events by a panel of experts will be favorable for the application."

Ultimately, "We continue to believe that Heplisav is an approvable product, and we believe the opportunity to present the case publicly before a panel of experts will be beneficial for the chances of approval. We continue to assign a 70% probability of approval, and maintain our Outperform rating and $17 fair value assessment of Dynavax shares," Xu contends.

According to TipRanks, which measures analysts' and bloggers' success rate based on how their calls perform, four-star analyst Y Katherine Xu is ranked #629 out of 4,553 analysts. Xu has a 51% success rate and realizes 12.6% in her annual returns. When recommending DVAX, Xu yields 11.2% in average profits on the stock.


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