Dynavax's Proxy Battle: Boardroom Strategy vs. Shareholder Activism—A Crossroads for Long-Term Value

The proxy battle between Dynavax Technologies (NASDAQ: DVAX) and activist investor Deep Track Capital is more than a corporate governance dispute—it's a defining moment for whether shareholders prioritize short-term capital returns or long-term strategic value creation. At the heart of the conflict is the question: Can a board's proven track record of outperforming peers and delivering disciplined capital allocation justify resisting calls for change, or does it reflect a governance gap that risks stifling future growth? The answer will determine not just who sits on the board, but the trajectory of shareholder value for years to come.

The Case for Dynavax's Current Board: A Proven Growth Strategy

Dynavax's defense hinges on its strong financial performance and strategic execution over the past five years. The company's hepatitis B vaccine, HEPLISAV-B, has driven record revenue growth, with sales rising 36% year-over-year in Q1 2025 to $65 million. Total shareholder returns (TSR) have outperformed peers by a wide margin: 203% over five years versus 9% for vaccine-focused peers and a 17% decline for the S&P Biotechnology Index. This success is no accident. Dynavax has balanced aggressive R&D investments—such as its pipeline for pandemic influenza and Lyme disease vaccines—with disciplined capital returns, including an $172 million share buyback program completed by May 2025 (85% of a $200 million authorization).

The board's current composition, with directors like Scott Myers (Chairman with decades of biotech leadership) and Brent MacGregor (vaccine development expert), has been instrumental in these achievements. Their expertise aligns with the company's focus on commercializing vaccines—a strategy validated by HEPLISAV-B's 43% U.S. market share and growing international demand. Replacing these leaders with Deep Track's nominees, who lack direct biotech board experience, risks destabilizing a proven formula for sustained growth.

Deep Track's Critique: A Governance Gap or a Valid Concern?

Glass Lewis, the influential proxy advisory firm, has sided with Deep Track by recommending shareholders withhold votes for Myers and MacGregor and support two of the activist's nominees, Brett Erkman and Donald Santel. The rationale centers on two points:

1. Capital Allocation Shortcomings: Glass Lewis argues that Dynavax's $299 million cash balance (as of March 2025) represents excessive liquidity—over half its market cap—and signals a failure to deploy capital effectively. While the company defends this as prudent, critics see it as a missed opportunity to accelerate growth or return more cash to shareholders.

1. Boardroom Stagnation: Glass Lewis highlights a lack of directors with capital markets or institutional investor experience, which it claims limits the board's ability to engage constructively with shareholders. Erkman's background as a life sciences investor and Santel's M&A expertise are presented as critical additions to address this gap.

However, these arguments ignore the strategic rationale behind Dynavax's cash reserves. The company has consistently prioritized R&D investments in high-potential programs—such as its pandemic influenza vaccine, expected to enter trials in Q2 2025—and global market expansion. Redirecting cash toward short-term buybacks, as Deep Track advocates, could stifle these initiatives, undermining long-term value.

The Risks of Short-Termism: Why Shareholders Should Think Twice

Activist campaigns often demand immediate returns, but they can come at the expense of sustainable growth. Dynavax's board has demonstrated an ability to balance both:

• Pipeline Progress: The Lyme disease vaccine program, entering clinical development in 2027, and pandemic influenza initiatives represent multi-billion-dollar opportunities. Cutting R&D spending to appease shareholders now could derail these projects.
• Market Dynamics: The biotechnology sector is notoriously volatile. Dynavax's cash reserves provide a buffer against regulatory setbacks, supply chain disruptions, or shifts in market demand—a critical hedge in an uncertain environment.

Deep Track's push for governance changes may also signal a broader agenda. The firm's 14.8% stake and demand for board control by 2026 raise questions about its commitment to the company's long-term vision versus its own profit motives.

Conclusion: Vote for Continuity—The Proven Path to Value

The June 11 shareholder meeting is a pivotal moment. Voting FOR Dynavax's current directors (via the GOLD proxy card) preserves a board with the expertise and track record to execute on a strategy that has already delivered outsized returns. While governance improvements are always welcome, they should not come at the cost of destabilizing a growth engine.

Shareholders who prioritize long-term value over short-term gains should reject the siren call of activism. Dynavax's leadership has proven it can navigate the complexities of biotech innovation while rewarding investors. The question is: Will shareholders trust that vision, or will they gamble on a boardroom shake-up that could unravel years of progress? The answer is clear.

Act now: Submit your GOLD proxy card to support the board that has delivered 203% in five years—and the strategy poised to create even more value.