Deep Track Capital Initiates Proxy Fight with Dynavax, Challenging Company's Strategic Direction

Life sciences investment firm Deep Track Capital has publicly launched a proxy fight against Dynavax Technologies Corporation, aiming to redirect the company's focus towards its sole approved asset, the hepatitis B vaccine Heplisav. This move comes after months of private attempts to influence Dynavax's corporate strategy.

Proxy Battle Details and Board Nominations

Deep Track Capital, which owns approximately 13.5% of Dynavax's shares, has nominated four directors to the company's board. The nominees include Deep Track's managing director Brett Erkman and three independent biotech executives: Jeffrey Farrow, CFO at Tarsus Pharmaceuticals; Michael Mullette, interim CEO at Lykos Therapeutics; and Donald Santel, former president and CEO of Hyperion Therapeutics.

In a letter to shareholders dated February 19, 2025, Deep Track outlined several concerns about Dynavax's current board, including:

• The lack of open market stock purchases by board members up for election
• Chairman Scott Myers' simultaneous role as chairman for three other biotech companies
• Dynavax's practice of staggering board elections

Strategic Disagreements and Asset Focus

Deep Track's primary contention lies in Dynavax's pursuit of external asset acquisitions since 2021, which the investment firm views as a "misguided empire-building exercise." Deep Track argues that these efforts have been unproductive and distract management from growing Heplisav, which was approved in 2017 and is projected to generate over $1 billion through 2030.

While Dynavax has two other vaccines in development—a wholly owned shingles vaccine and a Department of Defense-partnered plague vaccine—Deep Track's letter did not address these candidates. The company recently dropped a combination vaccine for tetanus, diphtheria, and acellular pertussis in November 2024 due to unimpressive phase 1 data.

Dynavax's Recent Board Changes and Deep Track's Response

In response to mounting pressure, Dynavax announced changes to its board in January 2025, appointing Emilio Emini, Ph.D., and Lauren Silvernail as part of a "refreshment program." The company also proposed phasing out its staggered board elections.

Deep Track, however, dismissed these changes as "reactive," noting that Silvernail has connections to Myers through Harpoon Therapeutics, similar to the board member she is replacing. The investment firm also expressed concern that the proposed changes to the board's election structure would not be fully implemented until 2028.

As this proxy battle unfolds, the pharmaceutical industry will be watching closely to see how it impacts Dynavax's strategic direction and the potential implications for its vaccine portfolio. Dynavax is scheduled to report its full-year 2024 results on February 20, which may provide further insights into the company's financial position and strategic plans.