Deep Track vs. Dynavax: A Proxy Battle Over Biotech Strategy and Shareholder Value

The proxy fight between activist investor Deep Track Capital and Dynavax Technologies Corporation (DVAX) has reached a fever pitch, with both sides urging shareholders to choose between two starkly different visions for the company’s future. At stake: control of the board, the fate of its hepatitis B vaccine Heplisav-B, and whether to prioritize short-term profits or long-term growth.

The Activist Playbook: Deep Track’s Case for Change

Deep Track, which owns 14.5% of Dynavax’s shares, argues that the company’s leadership has squandered shareholder value by chasing acquisitions while failing to capitalize on Heplisav-B’s dominance. The firm’s four director nominees—Brett Erkman (a biotech investor), Jeffrey Farrow (a CFO with pharma deal expertise), Michael Mullette (a Moderna executive), and Donald Santel (a former biotech CEO)—are positioned as independent voices to refocus the company.

Their case hinges on three pillars:
1. Strategic Missteps: Dynavax’s stock has underperformed the Nasdaq Biotechnology Index by nearly 50% over three years, despite Heplisav-B’s sales growing fourfold since 2021.
2. Capital Allocation Failures: With $714 million in cash, Dynavax refinanced expensive convertible debt instead of returning capital to shareholders. Deep Track proposes a $400 million buyback program to unlock value.
3. Governance Concerns: The board’s slow declassification and ties to Chairman Scott Myers—such as two recent hires with prior board affiliations—are seen as signs of entrenchment.

Deep Track also highlights execution risks, including the FDA’s rejection of a Heplisav-B label expansion in 2024 and the discontinuation of its Tdap-1018 vaccine candidate, which it argues stemmed from overreach into non-core projects.

Dynavax’s Defense: Growth or Liquidation?

Dynavax defends its strategy as balanced and forward-thinking. Its four nominees—Brent MacGregor (vaccine commercialization expert), Scott Myers (30-year pharma veteran), Lauren Silvernail (biotech finance leader), and Elaine Sun (investment banking veteran)—are framed as the best stewards of long-term value. Key points:
- Financial Outperformance: Dynavax’s five-year TSR of 267% tops the Nasdaq Biotech Index, and Heplisav-B’s U.S. revenue is projected to hit $325 million in 2025, with a $900 million peak by 2030.
- Pipeline Potential: The company is developing a shingles vaccine and a plague vaccine with the U.S. government, leveraging its proprietary CpG 1018 adjuvant.
- Capital Discipline: The $200 million buyback (已完成 $128.8 million) and debt refinancing have strengthened the balance sheet without sacrificing growth.

Dynavax warns that Deep Track’s “single-asset” focus would abandon these opportunities, leaving the company vulnerable to competitors and regulatory risks.

The Proxy Mechanics: A Universal Battle for Control

The June 11 shareholder meeting will decide the fate of the board. Shareholders must choose between:
- The Dynavax slate (GOLD proxy card): Prioritizing R&D and strategic acquisitions.
- The Deep Track slate (WHITE proxy card): Focusing on buybacks and sidelining non-core projects.

Universal proxy rules allow shareholders to mix nominees, but the outcome hinges on which side’s vision resonates most. Deep Track’s 14.5% stake gives it a foothold, but the broader shareholder base must decide whether to trust activists with a “liquidate and distribute” agenda or management’s “build and grow” approach.

The Bottom Line: Value in Vision

The battle boils down to a simple question: Can Heplisav-B’s growth alone justify Dynavax’s current valuation, or does the company need its pipeline and acquisitions to thrive?

• Deep Track’s Case: With Heplisav-B projected to generate over $1 billion in cash by 2030 (exceeding Dynavax’s current enterprise value), the argument for maximizing near-term returns is compelling. But abandoning R&D could leave the company without a next-generation revenue stream.
• Dynavax’s Case: The shingles and plague vaccines represent a $multi-billion addressable market. Even a 10% share of these markets could add $200–$300 million annually to Heplisav-B’s revenue, justifying its current valuation.

Conclusion: A Vote for Pragmatism

Shareholders face a high-stakes choice. Deep Track’s nominees offer a clear path to near-term returns, but their strategy risks sacrificing long-term growth. Dynavax’s leadership, while under fire for governance, has delivered strong financial results and a diversified pipeline.

The data favors Dynavax’s position:
- Heplisav-B’s 44% U.S. market share is already industry-leading, and its revenue trajectory shows no signs of slowing.
- The $714 million cash reserve provides ample flexibility for both buybacks and strategic investments.
- The pipeline programs, though risky, could unlock multibillion-dollar opportunities.

While governance reforms are needed, the board’s declassification and refreshment efforts signal progress. Activists often win by focusing on the short term, but in this case, shareholders who prioritize sustainable value should side with Dynavax’s nominees. The alternative—betting on a “single-asset” biotech in a volatile market—feels like a gamble the board shouldn’t take.

Final Verdict: Vote for the GOLD proxy card. The future of Dynavax depends on balancing today’s profits with tomorrow’s potential.