Dynavax's Governance Crossroads: Why ISS Backing Signals a Strategic Buy

In the high-stakes world of biotech governance, Dynavax Technologies (NASDAQ: DVAX) stands at a pivotal juncture. With Institutional Shareholder Services (ISS) recommending investors back the company's current board nominees, the stakes are clear: support a proven strategy driving long-term growth or risk destabilization via activist interference. For investors, this vote isn't just about governance—it's a call to bet on a company poised to capitalize on its vaccine adjuvant expertise. Here's why ISS's endorsement matters now.

ISS's Endorsement: A Vote of Confidence in Dynavax's Long Game

ISS's May 23 recommendation to support all four Dynavax director nominees—Brent MacGregor, Scott Myers, Lauren Silvernail, and Elaine Sun—carries weight. The advisory firm dismissed dissident group Deep Track Capital's campaign as built on “blatantly distorted” data, citing Dynavax's 203% total shareholder return (TSR) over five years as evidence of strategic success. This isn't just about past performance: the board's focus on CpG 1018® adjuvant technology—the backbone of its $950M+ pandemic-era collaborations—positions Dynavax to dominate next-gen vaccine development.

The ISS rationale hinges on board expertise and accountability. Six of nine directors joined since 2020, ensuring fresh perspectives while retaining deep biotech acumen. Nominees like Myers (ex-Moderna SVP) and Sun (vaccine development veteran) bring critical skills to navigate regulatory and commercial challenges. Replacing them with Deep Track's nominees, ISS argues, would strip the board of its strategic coherence.

Deep Track's Flawed Playbook: Short-Termism vs. Sustained Growth

Deep Track's demands—increased buybacks, board seats for its principals—reflect a myopic focus on quarterly gains over long-term value. While the dissident group highlights a 23% year-to-date share price drop and “stagnant” HEPLISAV-B® market share, these critiques ignore context. The vaccine's 43% U.S. market share remains robust, and 2025 Q1 revenue surged 34% YoY to $68.2M, driven by CpG 1018®-based partnerships.

The data tells the real story: while the stock has dipped recently, its trajectory outperforms peers. Deep Track's proposal to “strip-mine” Dynavax—prioritizing buybacks over R&D—would jeopardize its pipeline of four in-house vaccine programs and 15+ partner-led projects, undermining future revenue streams.

The Bottom Line: Governance as a Growth Lever

Dynavax's current strategy balances capital returns (85% of a $200M buyback program completed) with strategic reinvestment in its adjuvant platform. This approach aligns with ISS's emphasis on sustainable governance: a board focused on executing against its core strengths, not chasing activist demands. The dissident's 14.8% stake pales against the 203% five-year TSR—a testament to management's track record.

Act Now: The Catalyst for a Rebound

With ISS's recommendation and the June 11 shareholder vote looming, this is a pivotal moment. A “FOR” vote (via the GOLD proxy card) signals support for a board capable of scaling CpG 1018®'s potential. Risks remain—regulatory hurdles, pipeline delays—but the current team's discipline in capital allocation and R&D prioritization mitigates these.

Investors should note: Dynavax's stock trades at a 52-week low, even as Q1 results beat expectations. A post-vote rebound could be swift if ISS's institutional followership backs the board. This is a buy signal for those willing to look past short-term noise.

Final Take: Governance as a Value Multiplier

In biotech, governance isn't just about boardroom battles—it's about who can turn scientific potential into sustained profits. ISS's endorsement of Dynavax's leadership is a green light for investors to capitalize on a undervalued stock with a proven platform and strategic clarity. The dissident's campaign may create near-term volatility, but sticking with the current board offers a clearer path to unlocking CpG 1018®'s $ billions in untapped value. Act now before the market catches up.