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What changed in DYNAVAX TECHNOLOGIES CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of DYNAVAX TECHNOLOGIES CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+286 added−260 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in DYNAVAX TECHNOLOGIES CORP's 2024 10-K

286 paragraphs added · 260 removed · 209 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

116 edited+53 added−25 removed310 unchanged
Biggest changeIf we fail to comply with the extensive requirements applicable to biopharmaceutical manufacturers and marketers under the healthcare fraud and abuse, anticorruption, privacy, transparency and other laws of the jurisdictions in which we conduct our business, we may be subject to significant liability. 41 Our activities, and the activities of our agents, including some contracted third parties, are subject to extensive government regulation and oversight both in the U.S. and in foreign jurisdictions.
Biggest changeOur use of generative AI could make it more difficult to comply with various privacy laws and other privacy obligations in the U.S. and Europe and could negatively affect our ability to protect or own certain intellectual property, any or all of which may cause us to incur significant expense, cause reputational damage, and otherwise adversely affect our business. 40 Table of Contents If we fail to comply with the extensive requirements applicable to biopharmaceutical manufacturers and marketers under the healthcare fraud and abuse, anticorruption, privacy, transparency and other laws of the jurisdictions in which we conduct our business, we may be subject to significant liability.
Risks Related to Our Outstanding Convertible Notes Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
Risks Related to Our Outstanding Convertible Notes Servicing our Convertible Notes requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
Relating to our Bio E Supply Agreement, we entered into an amendment and an assignment agreement in April 2023, pursuant to which (i) CEPI forgave the entirety of remaining amounts outstanding relating to the Bio E CEPI Advance Payments for CpG 1018 Materials allocated to Bio E and has assumed our previous rights to collect $47.4 million of Bio E accounts receivable, (ii) we collected $14.5 million from Bio E, resulting in no accounts receivable balance as of December 31, 2023, and (iii) we derecognized a $47.4 million CEPI accrual in connection with the Bio E CEPI Advance Payments.
Relating to our Bio E Supply Agreement, we entered into an amendment and an assignment agreement in April 2023, pursuant to which (i) CEPI forgave the entirety of remaining amounts outstanding relating to the Bio E CEPI Advance Payments for CpG 1018 Materials allocated to Bio E and has assumed our previous rights to collect $47.4 million of Bio E accounts receivable, (ii) we collected $14.5 million from Bio E, resulting in no accounts receivable balance as of December 31, 2024 and December 31, 2023, and (iii) we derecognized a $47.4 million CEPI accrual in connection with the Bio E CEPI Advance Payments.
The risks and uncertainties that we face with respect to our patents and other proprietary rights include the following: • we may not receive an issued patent for any of our patent applications or for any patent applications that we may have exclusively licensed, now or in the future; • the pending patent applications we have filed or to which we have exclusive rights may take longer than we expect to result in issued patents; • the claims of any patents that are issued may not provide meaningful protection or may not be valid or enforceable; • we might not be able to develop additional proprietary technologies that are patentable; • the patents licensed or issued to us or our collaborators may not provide a competitive advantage; • patents issued to other parties may limit our intellectual property protection or harm our ability to do business; • other parties may independently develop similar or alternative technologies or duplicate our technologies and commercialize discoveries that we attempt to patent; • other parties may design around technologies we have licensed, patented or developed; • pending patent applications or issued patents may be challenged by third parties in litigation or other proceedings, such as inter partes reviews, pre- and post-grant oppositions, reexaminations, derivation proceedings and post-grant review, in the U.S or abroad; • we may be subject to claims that our employees or consultants have used or disclosed trade secrets or other proprietary information of their former employers or clients, thus putting our intellectual property at risk; • our reliance on trade secret protection and confidentiality and other agreements may not be sufficient to protect our interests and proprietary know-how related to our products and processes; and • it may be found that we or our collaborators have not complied with various procedural, document submission, fee payment and other requirements imposed by patent offices, and our patent protection could be reduced or eliminated.
The risks and uncertainties that we face with respect to our patents and other proprietary rights include the following: • we may not receive an issued patent for any of our patent applications or for any patent applications that we may have exclusively licensed, now or in the future; 45 Table of Contents • the pending patent applications we have filed or to which we have exclusive rights may take longer than we expect to result in issued patents; • the claims of any patents that are issued may not provide meaningful protection or may not be valid or enforceable; • we might not be able to develop additional proprietary technologies that are patentable; • the patents licensed or issued to us or our collaborators may not provide a competitive advantage; • patents issued to other parties may limit our intellectual property protection or harm our ability to do business; • other parties may independently develop similar or alternative technologies or duplicate our technologies and commercialize discoveries that we attempt to patent; • other parties may design around technologies we have licensed, patented or developed; • pending patent applications or issued patents may be challenged by third parties in litigation or other proceedings, such as inter partes reviews, pre- and post-grant oppositions, reexaminations, derivation proceedings and post-grant review, in the U.S or abroad; • we may be subject to claims that our employees or consultants have used or disclosed trade secrets or other proprietary information of their former employers or clients, thus putting our intellectual property at risk; • our reliance on trade secret protection and confidentiality and other agreements may not be sufficient to protect our interests and proprietary know-how related to our products and processes; and • it may be found that we or our collaborators have not complied with various procedural, document submission, fee payment and other requirements imposed by patent offices, and our patent protection could be reduced or eliminated.
Changes in the broader macroeconomic condition, including historically high inflation, changes in interest rates, government tapering policies, impact of pandemics or endemics and instances of geopolitical instability, such as that resulting from the conflicts in the Middle East and Ukraine, can and have caused changes in market prices, notwithstanding a lack of fundamental change in the underlying business models or prospects of companies.
Changes in the broader macroeconomic condition, including historically high inflation, changes in interest rates, government policies, impact of pandemics or endemics and instances of geopolitical instability, such as that resulting from the conflicts in the Middle East and Ukraine, can and have caused changes in market prices, notwithstanding a lack of fundamental change in the underlying business models or prospects of companies.
Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable flaws or bugs that could result in a breach of or disruption to our 54 information technology systems (including our products or the third-party information technology systems that support us and our goods).
Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable flaws or bugs that could result in a breach of or disruption to our information technology systems (including our products or the third-party information technology systems that support us and our goods).
The risks described below are not 26 the only ones facing us. If any of the events described in the following risk factors occurs, our business, operating results and financial condition could be seriously harmed. This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties.
The risks described below are not the only ones facing us. If any of the events described in the following risk factors occurs, our business, operating results and financial condition could be seriously harmed. This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties.
We will likely compete with several of these companies in the hepatitis space, shingles space, Tdap space and other spaces occupied by any other product candidates we ultimately choose to advance through our pipeline in the future. Products in our clinical pipeline, if approved, will also face competition from competitors who have competing clinical programs or already approved products.
We will likely compete with several of these companies in the hepatitis space, shingles space, and other spaces occupied by any other product candidates we ultimately choose to advance through our pipeline in the future. Products in our clinical pipeline, if approved, will also face competition from competitors who have competing clinical programs or already approved products.
In the U.S., pharmaceutical and biotechnology companies have been the target of numerous government prosecutions and investigations alleging violations of law, including claims asserting impermissible off-label promotion of pharmaceutical 42 products, payments intended to influence the referral of federal or state health care business, submission of false claims for government reimbursement, or submission of incorrect pricing information.
In the U.S., pharmaceutical and biotechnology companies have been the target of numerous government prosecutions and investigations alleging violations of law, including claims asserting impermissible off-label promotion of pharmaceutical products, payments intended to influence the referral of federal or state health care business, submission of false claims for government reimbursement, or submission of incorrect pricing information.
With respect to HEPLISAV-B and our other product candidates in development, we and our third-party manufacturers and suppliers are required to comply with applicable cGMP regulations and other international regulatory requirements. The regulations require that our products and product candidates be manufactured and records maintained in a prescribed manner 33 with respect to manufacturing, testing and quality control/quality assurance activities.
With respect to HEPLISAV-B and our other product candidates in development, we and our third-party manufacturers and suppliers are required to comply with applicable cGMP regulations and other international regulatory requirements. The regulations require that our products and product candidates be manufactured and records maintained in a prescribed manner with respect to manufacturing, testing and quality control/quality assurance activities.
If we are unable to successfully manage our international operations, we may incur significant unanticipated costs and delays in regulatory approval or commercialization of our products or product candidates, which would impair our ability to generate revenues. 37 We rely on CROs and clinical sites and investigators for our clinical trials.
If we are unable to successfully manage our international operations, we may incur significant unanticipated costs and delays in regulatory approval or commercialization of our products or product candidates, which would impair our ability to generate revenues. We rely on CROs and clinical sites and investigators for our clinical trials.
The FDA or other foreign regulatory authorities or we ourselves could delay, suspend or halt our clinical trials of a product candidate for numerous reasons, including with respect to our product candidates and those of our partners in combination agent studies: • deficiencies in the trial design; • deficiencies in the conduct of the clinical trial including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols; • deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; • a product candidate may have unforeseen adverse side effects, including fatalities, or a determination may be made that a clinical trial presents unacceptable health risks; • the time required to determine whether a product candidate is effective may be longer than expected; • fatalities or other adverse events arising during a clinical trial that may not be related to clinical trial treatments; • a product candidate or combination study may appear to be no more effective than current therapies; • the quality or stability of a product candidate may fail to conform to acceptable standards; • the inability to produce or obtain sufficient quantities of a product candidate to complete the trials; 38 • our inability to reach agreement on acceptable terms with prospective CROs and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • our inability to obtain IRB or Ethics Committee approval to conduct a clinical trial at a prospective site; • the inability to obtain regulatory approval to conduct a clinical trial; • lack of adequate funding to continue a clinical trial, including the occurrence of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties; • the inability to recruit and enroll individuals to participate in clinical trials for reasons including competition from other clinical trial programs for the same or similar indications; or • the inability to retain participants who have initiated a clinical trial but may withdraw due to side effects from the product, lack of efficacy or personal issues, or who are otherwise unavailable for further follow-up.
The FDA or other foreign regulatory authorities or we ourselves could delay, suspend or halt our clinical trials of a product candidate for numerous reasons, including with respect to our product candidates and those of our partners in combination agent studies: • deficiencies in the trial design; • deficiencies in the conduct of the clinical trial including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols; • deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; • a product candidate may have unforeseen adverse side effects, including fatalities, or a determination may be made that a clinical trial presents unacceptable health risks; • the time required to determine whether a product candidate is effective may be longer than expected; • fatalities or other adverse events arising during a clinical trial that may not be related to clinical trial treatments; • a product candidate or combination study may appear to be no more effective than current therapies; • the quality or stability of a product candidate may fail to conform to acceptable standards; • the inability to produce or obtain sufficient quantities of a product candidate to complete the trials; • our inability to reach agreement on acceptable terms with prospective CROs and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • our inability to obtain IRB or Ethics Committee approval to conduct a clinical trial at a prospective site; 37 Table of Contents • the inability to obtain regulatory approval to conduct a clinical trial; • lack of adequate funding to continue a clinical trial, including the occurrence of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties; • the inability to recruit and enroll individuals to participate in clinical trials for reasons including competition from other clinical trial programs for the same or similar indications; or • the inability to retain participants who have initiated a clinical trial but may withdraw due to side effects from the product, lack of efficacy or personal issues, or who are otherwise unavailable for further follow-up.
Our business operations are subject to interruption by natural disasters and other catastrophic events beyond our control, including, but not limited to, earthquakes, hurricanes, fires, droughts, tornadoes, electrical blackouts, public health crises and pandemics, war, terrorism, bank failures and geo-political unrest and uncertainties.
Our business operations are subject to interruption by natural disasters and other catastrophic events beyond our control, including, but not limited to, earthquakes, hurricanes, fires, droughts, tornadoes, tsunamis, electrical blackouts, public health crises and pandemics, war, terrorism, bank failures and geo-political unrest and uncertainties.
If we do not succeed in attracting new personnel and retaining and motivating existing 29 personnel, our operations may suffer and we may be unable to properly manage our business, obtain financing as needed, enter into collaborative arrangements, advance or sell our product candidates or generate revenues.
If we do not succeed in attracting new personnel and retaining and motivating existing personnel, our operations may suffer and we may be unable to properly manage our business, obtain financing as needed, enter into collaborative arrangements, advance or sell our product candidates or generate revenues.
If another party controls patents or patent applications covering our products, we may not be able to obtain the rights we need to those patents or patent applications in order to commercialize our products. 46 Litigation may be necessary to enforce patents issued or licensed to us or to determine the scope or validity of another party’s proprietary rights.
If another party controls patents or patent applications covering our products, we may not be able to obtain the rights we need to those patents or patent applications in order to commercialize our products. Litigation may be necessary to enforce patents issued or licensed to us or to determine the scope or validity of another party’s proprietary rights.
In addition, upon conversion of the 51 Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Convertible Notes being converted.
In addition, upon conversion of the Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Convertible Notes being converted.
The Capped Calls may affect the value of the Convertible Notes and our common stock. 52 In connection with the issuance of the Convertible Notes, we have entered into capped call transactions with the option counterparties totaling $27.2 million (the "Capped Calls").
The Capped Calls may affect the value of the Convertible Notes and our common stock. In connection with the issuance of the Convertible Notes, we have entered into capped call transactions with the option counterparties totaling $27.2 million (the "Capped Calls").
If any of these events occur, our manufacturing and supply chain, 53 distribution, sales and marketing efforts and other business operations could be subject to business shutdowns or disruptions and financial results could be adversely affected.
If any of these events occur, our manufacturing and supply chain, distribution, sales and marketing efforts and other business operations could be subject to business shutdowns or disruptions and financial results could be adversely affected.
Individual EU Member States will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement.
Individual EU Member States continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement.
Adequate third-party payor reimbursement may not be available to enable us to maintain price levels sufficient to achieve or maintain profitability, and such unavailability could harm our future prospects and reduce our stock price. The United Kingdom ("UK") and many EU Member States periodically review their reimbursement procedures for medicinal products, which could have an adverse impact on reimbursement status.
Adequate third-party payor reimbursement may not be available to enable us to maintain price levels sufficient to achieve or maintain profitability, and such unavailability could harm our future prospects and reduce our stock price. The UK and many EU Member States periodically review their reimbursement procedures for medicinal products, which could have an adverse impact on reimbursement status.
Such threats could include, but not be limited to social-engineering attacks (including through phishing attacks), online and offline fraud, malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, access attacks (such as credential stuffing or credential harvesting), personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
Such threats could include, but not be limited to social-engineering attacks (including through phishing attacks), online and offline fraud, malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, access attacks (such as credential stuffing or 53 Table of Contents credential harvesting), personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
In the event that we determine to pursue commercialization of HEPLISAV-B outside the United States, the European Union and Great Britain, our opportunity will depend upon our receiving regulatory approval, which can be costly and time consuming, and there is a risk that one or more regulatory bodies may require that we conduct additional clinical trials and/or take other measures which will take time and require that we incur significant additional expense.
In the event that we determine to pursue commercialization of HEPLISAV-B outside the United States, the European Union and the United Kingdom, our opportunity will depend upon our receiving regulatory approval, which can be costly and time consuming, and there is a risk that one or more regulatory bodies may require that we conduct additional clinical trials and/or take other measures which will take time and require that we incur significant additional expense.
For example, during the year ended December 31, 2022, we recognized $587.7 million of CpG 1018 adjuvant revenue. However, our CpG 1018 adjuvant supply agreements expired at the end of 2022, and as a result, we did not recognize CpG 1018 adjuvant revenue for the year ended December 31, 2023.
For example, during the year ended December 31, 2022, we recognized $587.7 million of CpG 1018 adjuvant revenue. However, our CpG 1018 adjuvant supply agreements expired at the end of 2022, and as a result, we did not recognize CpG 1018 adjuvant revenue for the years ended December 31, 2024 and December 31, 2023.
In addition, in accordance with our EU marketing authorization for HEPLISAV-B, HEPLISAV-B is subject to additional monitoring, meaning that it is monitored more intensively than other medicinal products. We may have similar obligations for future products if and when approved. Non-compliance with European Union or United Kingdom requirements regarding safety monitoring or pharmacovigilance can result in significant financial penalties.
In addition, in accordance with our EU marketing authorization for HEPLISAV-B, HEPLISAV-B is subject to additional monitoring, meaning that it is monitored more intensively than other medicinal products. We may have similar obligations for future products if and when approved. Non-compliance with European Union or UK requirements regarding safety monitoring or pharmacovigilance can result in significant financial penalties.
For example, we are working to develop our CpG 1018 adjuvant as a premier vaccine adjuvant through research collaborations, partnerships and supply arrangements. Current relationships and efforts are focused on adjuvanted vaccines for COVID-19, shingles, Tdap, plague and influenza.
For example, we are working to develop our CpG 1018 adjuvant as a premier vaccine adjuvant through research collaborations, partnerships and supply arrangements. Current relationships and efforts are focused on adjuvanted vaccines for COVID-19, shingles and plague.
Similar post-marketing obligations and commitments exist in the European Union and Great Britain. For example, we are required to submit periodic safety update reports to the European Medicines Agency ("EMA") and the MHRA and to keep an up-to-date risk management plan that takes into account new information that may lead to a significant change in the risk/benefit profile of HEPLISAV-B.
Similar post-marketing obligations and commitments exist in the European Union and the UK. For example, we are required to submit periodic safety update reports to the European Medicines Agency ("EMA") and the MHRA and to keep an up-to-date risk management plan that takes into account new information that may lead to a significant change in the risk/benefit profile of HEPLISAV-B.
During the year ended December 31, 2023, we did not receive any advanced payments from any of our customers to purchase CpG 1018 adjuvant. Our collaborators in many cases have purchase agreements with government agencies.
During the year ended December 31, 2024 and December 31, 2023, we did not receive any advanced payments from any of our customers to purchase CpG 1018 adjuvant. Our collaborators in many cases have purchase agreements with government agencies.
As we continue to grow as a commercial organization and enter into supply agreements with customers, those supply agreements will have obligations to deliver product that we are reliant upon third parties to manufacture on our behalf.
As we continue to grow as a commercial organization and enter into supply agreements with customers, those supply agreements will have obligations to deliver product that we are in part reliant upon third parties to manufacture on our behalf.
Relevant U.S. laws include: • the federal Anti-Kickback Statute, which prohibits persons from, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal health care programs, such as the Medicare and Medicaid programs; • federal false claims laws, including the False Claims Act and Civil Monetary Penalties Law, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, claims for payment to the government or its agents that are false or fraudulent; • the Federal Food, Drug and Cosmetic Act and governing regulations which, among other things, prohibit off-label promotion of prescription drugs; • the federal Physician Payments Sunshine Act created under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education and Reconciliation Act of 2010 (collectively, “ACA”) which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other health care professionals (such as physician assistants and nurse practitioners), and teaching hospitals, and ownership and investment interests held by such physicians and their immediate family members; • the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created, among other things, new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which imposes certain requirements on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, and their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors relating to the privacy, security, and transmission of individually identifiable health information; • the Foreign Corrupt Practices Act, which prohibits the payment of bribes to foreign government officials and requires that a company’s books and records accurately reflect our transactions; and • foreign and state law equivalents of each of the federal laws described above, such as anti-kickback and false claims laws which may apply to items or services reimbursed by state health insurance programs or any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government; state laws that require drug manufacturers to report information on the pricing of certain drugs; state and local laws that require the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted by HIPAA.
Relevant U.S. laws include: • the federal Anti-Kickback Statute, which prohibits persons from, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal health care programs, such as the Medicare and Medicaid programs; • federal false claims laws, including the False Claims Act and Civil Monetary Penalties Law, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, claims for payment to the government or its agents that are false or fraudulent; • the Federal Food, Drug and Cosmetic Act and governing regulations which, among other things, prohibit off-label promotion of prescription drugs; • the federal Physician Payments Sunshine Act created under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education and Reconciliation Act of 2010 (collectively, “ACA”) which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other health care professionals (such as physician assistants and nurse practitioners), and teaching hospitals, and ownership and investment interests held by such physicians and their immediate family members; • the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created, among other things, new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which imposes certain requirements on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, and their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors relating to the privacy, security, and transmission of individually identifiable health information; • the Foreign Corrupt Practices Act, which prohibits the payment of bribes to foreign government officials and requires that a company’s books and records accurately reflect our transactions; and • foreign and state law equivalents of each of the federal laws described above, such as anti-kickback and false claims laws which may apply to items or services reimbursed by state health insurance programs or any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government; state laws that require drug manufacturers to report information on the pricing of certain drugs; state and local laws that require the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted by HIPAA. 41 Table of Contents In the U.S., the Office of Inspector General for the Department of Health and Human Services, the Department of Justice, states’ Attorneys General and other governmental authorities actively enforce the laws and regulations discussed above.
For example, in March 2021, the UK introduced the Innovative Licensing and Access Pathways (“ILAP”) which brings together the MHRA, NICE, SMC and the All Wales Therapeutics and Toxicology Centre, to accelerate time to market for certain innovative products.
For example, in March 2021, the UK introduced the Innovative Licensing and Access Pathway (“ILAP”) which brings together the MHRA, NICE, SMC and the All Wales Therapeutics and Toxicology Centre, to accelerate time to market for certain innovative products.
Under our universal shelf registration statement, we may sell any combination of common stock, preferred stock, debt securities and warrants in one or more offerings, including pursuant to our sales agreement with Cowen & Company, LLC, under which we can offer and sell our common stock from time to time up to aggregate sales proceeds of $120.0 million.
Under our universal shelf registration statement, we may sell any combination of common stock, preferred stock, debt securities and warrants in one or more offerings, including pursuant to our sales agreement with Cowen & 49 Table of Contents Company, LLC, under which we can offer and sell our common stock from time to time up to aggregate sales proceeds of $120.0 million.
Any failure to accomplish any of these activities could prevent us from successfully increasing or maintaining the same level of commercial growth as we have seen in the past. 30 If HEPLISAV-B or any products we develop are not accepted by the market or if regulatory authorities limit our labeling indications, require labeling content that diminishes market uptake of HEPLISAV-B or any other products we develop, or limit our marketing claims, we may be unable to generate significant future revenues, if any.
Any failure to accomplish any of these activities could prevent us from successfully increasing or maintaining the same level of commercial growth as we have seen in the past. 29 Table of Contents If HEPLISAV-B or any products we develop are not accepted by the market or if regulatory authorities limit our labeling indications, require labeling content that diminishes market uptake of HEPLISAV-B or any other products we develop, or limit our marketing claims, we may be unable to generate significant future revenues, if any.
These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel. Many of our employees or consultants may have been previously employed in other biopharmaceutical companies, including our competitors or potential competitors.
These claims may be costly to defend and if 46 Table of Contents we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel. Many of our employees or consultants may have been previously employed in other biopharmaceutical companies, including our competitors or potential competitors.
Our ability to successfully obtain and retain market share and achieve and sustain profitability will be significantly dependent on the market’s acceptance of a price for HEPLISAV-B sufficient to achieve profitability, and future acceptance of such pricing. 31 Third-party payors are increasingly challenging the price and cost-effectiveness of medical products and services, and pricing, as well as coverage and reimbursement decisions, may not allow our future products to compete effectively with existing competitive products.
Our ability to successfully obtain and retain market share and achieve and sustain profitability will be significantly dependent on the market’s acceptance of a price for HEPLISAV-B sufficient to achieve profitability, and future acceptance of such pricing. 30 Table of Contents Third-party payors are increasingly challenging the price and cost-effectiveness of medical products and services, and pricing, as well as coverage and reimbursement decisions, may not allow our future products to compete effectively with existing competitive products.
While we maintain oversight over our clinical trials and conduct regular reviews of the data, we are dependent on the processes and quality control efforts of our third-party contractors to ensure that clinical trials are conducted properly and that detailed, quality records are maintained to support the results of the clinical trials that they are conducting on our behalf.
While we maintain oversight over our clinical trials and conduct regular reviews of the data, we are dependent on the processes and quality control efforts of our third-party contractors to ensure that clinical trials are conducted properly and 36 Table of Contents that detailed, quality records are maintained to support the results of the clinical trials that they are conducting on our behalf.
Consequently, a downward trend in prices of medicinal products in some countries could contribute to similar downward trends elsewhere. 32 We are subject to ongoing FDA, EU and comparable foreign post-marketing obligations concerning HEPLISAV-B, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated regulatory issues with HEPLISAV-B.
Consequently, a downward trend in prices of medicinal products in some countries could contribute to similar downward trends elsewhere. 31 Table of Contents We are subject to ongoing FDA, EU and comparable foreign post-marketing obligations concerning HEPLISAV-B, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated regulatory issues with HEPLISAV-B.
Among other things, the CEPI-Bio E Assignment Agreement resulted in no accounts receivable from Bio E, the derecognition of $47.4 million CEPI accrual in connection with the Bio E CEPI Advance Payments, and certain additional future payments contingent on Bio E’s receipt of 28 payments from the Government of India associated with its CORBEVAX product on or before August 15, 2025, which may not materialize.
Among other things, the CEPI-Bio E Assignment Agreement resulted in no accounts receivable from Bio E, the derecognition of $47.4 million 27 Table of Contents CEPI accrual in connection with the Bio E CEPI Advance Payments, and certain additional future payments contingent on Bio E’s receipt of payments from the Government of India associated with its CORBEVAX product on or before August 15, 2025, which may not materialize.
The results of clinical trials conducted to support regulatory approval in one or more jurisdictions, and any failure or delay in obtaining regulatory approval in one or more jurisdictions, may have a negative effect on the regulatory approval process in other jurisdictions, including our existing regulatory approval in the United States, the European Union and Great Britain.
The results of clinical trials conducted to support regulatory approval in one or more jurisdictions, and any failure or delay in obtaining regulatory approval in one or more jurisdictions, may have a negative effect on the regulatory approval process in other jurisdictions, including our existing regulatory approval in the United States, the European Union and the United Kingdom.
There are also modified schedules of conventional hepatitis B vaccines for limited age ranges that are approved in the United States, the European Union and Great Britain. Competition in European markets could affect our success or the success of our distributor in that market as well.
There are also modified schedules of conventional hepatitis B vaccines for limited age ranges that are approved in the United States, the European Union and the United Kingdom. Competition in European markets could affect our success or the success of our distributor in that market as well.
Legislators, policymakers and healthcare insurance funds in the EU and the United Kingdom may continue to propose and implement cost-containing measures to keep healthcare costs down, particularly due to the financial strain that COVID-19 placed on national healthcare systems of European countries.
Legislators, policymakers and healthcare insurance funds in the EU and the UK may continue to propose and implement cost-containing measures to keep healthcare costs down, particularly due to the financial strain that COVID-19 placed on national healthcare systems of European countries.
If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our 35 research, clinical development, manufacturing or commercialization efforts pursuant to that collaboration could be delayed or terminated, or it may be necessary for us to assume responsibility for expenses or activities that would otherwise have been the responsibility of our collaborator.
If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our research, clinical development, manufacturing or commercialization efforts pursuant to that collaboration could be 34 Table of Contents delayed or terminated, or it may be necessary for us to assume responsibility for expenses or activities that would otherwise have been the responsibility of our collaborator.
Even if we obtain regulatory approval for our product candidates, such as our U.S., European Union and Great Britain approvals of HEPLISAV-B, and are able to commercialize them as we have with HEPLISAV-B, our products may not gain market acceptance among physicians, patients, healthcare payors and the medical community.
Even if we obtain regulatory approval for our product candidates, such as our U.S., European Union and the United Kingdom approvals of HEPLISAV-B, and are able to commercialize them as we have with HEPLISAV-B, our products may not gain market acceptance among physicians, patients, healthcare payors and the medical community.
Failure to successfully manage our international operations could result in significant unanticipated costs and delays in regulatory approval or commercialization of our products or product candidates. We may seek to introduce HEPLISAV-B, or any other product candidates we may develop, to various additional markets in or outside of the U.S., the European Union and Great Britain.
Failure to successfully manage our international operations could result in significant unanticipated costs and delays in regulatory approval or commercialization of our products or product candidates. We may seek to introduce HEPLISAV-B, or any other product candidates we may develop, to various additional markets in or outside of the U.S., the European Union and the United Kingdom.
This Regulation, which entered into force in January 2022 and will apply as of January 2025, is intended to boost cooperation among EU Member States in assessing health technologies, including new medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in these areas.
This Regulation, which entered into force in January 2022 and applies as of January 12, 2025, is intended to boost cooperation among EU Member States in assessing health technologies, including new medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in these areas.
In addition, the manufacturing processes, labelling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for HEPLISAV-B are subject to extensive and ongoing regulatory requirements in the United States, the European Union and Great Britain.
In addition, the manufacturing processes, labelling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for HEPLISAV-B are subject to extensive and ongoing regulatory requirements in the United States, the European Union and the UK.
It is possible we may have similar write-offs in the future. We may develop, seek regulatory approval for and market HEPLISAV-B or any other product candidates outside of the U.S., the European Union and Great Britain, requiring a significant additional commitment of resources.
It is possible we may have similar write-offs in the future. We may develop, seek regulatory approval for and market HEPLISAV-B or any other product candidates outside of the U.S., the European Union and the United Kingdom, requiring a significant additional commitment of resources.
Developing, seeking regulatory approval for and marketing our product candidates in or outside of the U.S., the European Union and Great Britain in jurisdictions where we don't currently have approval could impose substantial costs, impose burdens on our personnel, and divert management’s attention from domestic operations.
Developing, seeking regulatory approval for and marketing our product candidates in or outside of the U.S., the European Union and the United Kingdom in jurisdictions where we don't currently have approval could impose substantial costs, impose burdens on our personnel, and divert management’s attention from domestic operations.
From October 1 through December 31, 2023, the conditions allowing holders to convert all or any portion of their Convertible Notes were not met. In the event the conditional conversion feature of the Convertible Notes is triggered, holders of Convertible Notes will be entitled to convert their Convertible Notes at any time during specified periods at their option.
From January 1 through December 31, 2024, the conditions allowing holders to convert all or any portion of their Convertible Notes were not met. In the event the conditional conversion feature of the Convertible Notes is triggered, holders of Convertible Notes will be entitled to convert their Convertible Notes at any time during specified periods at their option.
Other European Union Member States allow companies to fix their own prices for medicines, but monitor and control company profits. Any delay in being able to market our products in the European Union, Great Britain or elsewhere may adversely affect our business and financial condition.
Other European Union Member States allow companies to fix their own prices for medicines, but monitor and control company profits. Any delay in being able to market our products in the European Union, the United Kingdom or elsewhere may adversely affect our business and financial condition.
Tax law changes could adversely affect our business and financial condition. 39 New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
Conversion of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock. From October 1 through December 31, 2023, the conditions allowing holders to convert all or any portion of their Convertible Notes have not been met.
Conversion of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock. From January 1 through December 31, 2024, the conditions allowing holders to convert all or any portion of their Convertible Notes have not been met.
We have also received approval in the European Union and Great Britain for HEPLISAV-B. Successful commercialization of HEPLISAV-B in these regions or elsewhere will require significant resources and time, and there can be no certainty that we will succeed in these efforts.
We have also received approval in the European Union and the United Kingdom for HEPLISAV-B. Successful commercialization of HEPLISAV-B in these regions or elsewhere will require significant resources and time, and there can be no certainty that we will succeed in these efforts.
As of December 31, 2023, we had approximately $120.0 million of our common stock remaining available for future issuance under our sales agreement with Cowen & Company, LLC.
As of December 31, 2024, we had $120.0 million of our common stock remaining available for future issuance under our sales agreement with Cowen & Company, LLC.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
We may not be able to engage in 50 Table of Contents any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
Our success in developing marketable products and achieving a competitive position will depend, in part, on our ability to attract and retain qualified personnel in the near-term, particularly with respect to HEPLISAV-B commercialization.
Our success in developing marketable products and achieving a 28 Table of Contents competitive position will depend, in part, on our ability to attract and retain qualified personnel in the near-term, particularly with respect to HEPLISAV-B commercialization.
The market price of our common stock is subject to substantial volatility depending upon many factors, many of which are beyond our control, including: • impact of COVID-19 or other respiratory or seasonal vaccination initiatives on our HEPLISAV-B vaccine, CpG 1018 adjuvant, or other product revenue; • progress or results of any of our clinical trials or regulatory or manufacturing efforts, in particular any announcements regarding the progress or results of our planned trials and BLA filing and communications, from the FDA or other regulatory authorities; • our ability to receive timely regulatory approval for our product candidates; • our ability to establish and maintain collaborations for the development and commercialization of our product candidates; • our ability to raise additional capital to fund our operations, to the extent needed; • technological innovations, new commercial products or drug discovery efforts and preclinical and clinical activities by us or our competitors; • changes in our intellectual property portfolio or developments or disputes concerning the proprietary rights of our products or product candidates; • our ability to obtain component materials and successfully enter into manufacturing relationships for our products or product candidates or establish manufacturing capacity on our own; • our ability to establish and maintain licensing agreements for intellectual property necessary for the development of our product candidates; • changes in government regulations, general economic conditions or industry announcements; • changes in the structure of healthcare payment systems; • issuance of new or changed securities analysts’ reports or recommendations; • actual or anticipated fluctuations in our quarterly financial and operating results; • the volume of trading in our common stock; 50 • investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance; and • industry conditions and general financial, economic and political instability.
The market price of our common stock is subject to substantial volatility depending upon many factors, many of which are beyond our control, including: • our ability to expand or retain our HEPLISAV-B vaccine market share; • impact of COVID-19 or other respiratory or seasonal vaccination initiatives on our HEPLISAV-B vaccine, CpG 1018 adjuvant, or other product revenue; 48 Table of Contents • progress or results of any of our clinical trials or regulatory or manufacturing efforts, in particular any announcements regarding the progress or results of our planned trials and BLA filing and communications, from the FDA or other regulatory authorities; • our ability to receive timely regulatory approval for our product candidates; • our ability to establish and maintain collaborations for the development and commercialization of our product candidates; • our ability to raise additional capital to fund our operations, to the extent needed; • technological innovations, new commercial products or drug discovery efforts and preclinical and clinical activities by us or our competitors; • changes in our intellectual property portfolio or developments or disputes concerning the proprietary rights of our products or product candidates; • our ability to obtain component materials and successfully enter into manufacturing relationships for our products or product candidates or establish manufacturing capacity on our own; • our ability to establish and maintain licensing agreements for intellectual property necessary for the development of our product candidates; • changes in government regulations, general economic conditions or industry announcements; • changes in the structure of healthcare payment systems; • issuance of new or changed securities analysts’ reports or recommendations; • accumulations of our common stock or other public actions by our shareholders and related market or investor perceptions and expectations, some of which may be speculative or short term in nature; • actual or anticipated fluctuations in our quarterly financial and operating results; • the volume of trading in our common stock; • investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance; and • industry conditions and general financial, economic and political instability.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. 55 ITEM 1B. UNRE SOLVED STAFF COMMENTS None.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.
Our actual or perceived failure to comply with such obligations (or by the third parties supporting our operations) could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.
These competitor products may compete with our products and product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
These competitor products may compete with our products and product 47 Table of Contents candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
The Regulation foresees a three-year transitional period and will permit EU Member States to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
The Regulation permits EU Member States to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
The sale or issuance of our securities, including those issuable upon exercise of the outstanding warrants or conversion of the preferred stock, as well as the existence of outstanding options and shares of common stock reserved for issuance under our option and equity incentive plans also may adversely affect the terms upon which we are able to obtain additional capital through the sale of equity securities.
The sale or issuance of our securities, as well as the existence of outstanding options and shares of common stock reserved for issuance under our option and equity incentive plans also may adversely affect the terms upon which we are able to obtain additional capital through the sale of equity securities.
We will be able to protect our proprietary rights from unauthorized use only to the extent that these rights are covered by valid and enforceable patents for a commercially sufficient term or are otherwise effectively maintained as trade secrets. We try to protect our proprietary rights by filing and prosecuting U.S. and foreign patent applications.
We will be able to protect our proprietary rights from unauthorized use only to the extent that these rights are covered by valid and enforceable patents for a commercially sufficient term or are otherwise effectively maintained as trade secrets.
It is uncertain if and to what extent various states will conform to the aforementioned U.S. tax law provisions. As of December 31, 2023, we had U.S. federal and state NOL carryforwards of $376.6 million and $283.9 million, respectively.
It is uncertain if and to what extent various states will conform to the aforementioned U.S. tax law provisions. As of December 31, 2024, we had U.S. federal and state NOL carryforwards of $293.5 million and $262.9 million, respectively.
Of the $376.6 million U.S. federal NOL carryforwards, $353.5 million may be carried forward indefinitely with utilization limited to 80% of taxable income, and the remainder will begin to expire in 2024. The state NOL carryforwards will begin to expire in 2024.
Of the $293.5 million U.S. federal NOL carryforwards, $293.1 million may be carried forward indefinitely with utilization limited to 80% of taxable income, and the remainder will begin to expire in 2025. The state NOL carryforwards will begin to expire in 2025.
We are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
We and the third parties supporting our operations are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
In light of the fact that the United Kingdom has left the EU, Regulation No 2021/2282 on HTA will not apply in the United Kingdom.
In light of the fact that the UK has left the EU, Regulation No 2021/2282 on HTA does not apply in the UK.
Further, to the extent that we contract with third parties for the manufacture of our products or product candidates, our ability to control third-party compliance with FDA requirements will be limited to contractual remedies and rights of inspection.
Manufacturers are subject to regular, periodic inspections by the FDA following initial approval. Further, to the extent that we contract with third parties for the manufacture of our products or product candidates, our ability to control third-party compliance with FDA requirements will be limited to contractual remedies and rights of inspection.
Each of our clinical trials requires the investment of substantial planning, expense and time and the timing of the commencement, continuation and completion of these clinical trials may be subject to significant delays relating to various 34 causes, including scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling participants who meet trial eligibility criteria, failure of participants to complete the clinical trial, delay or failure to obtain Institutional Review Board (“IRB”), Ethics Committee or regulatory approval to conduct a clinical trial at a prospective site, unexpected adverse events and shortages of available vaccine or component supply.
Each of our clinical trials requires the investment of substantial planning, expense and time and the timing of the commencement, continuation and completion of these clinical trials may be subject to significant delays relating to various causes, including scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling participants who meet trial eligibility criteria, failure of participants to complete the clinical trial, delay or failure to obtain Institutional Review Board (“IRB”), Ethics Committee or regulatory approval to conduct a clinical trial at a prospective site, unexpected adverse events and shortages of available vaccine or component supply. 33 Table of Contents Participant enrollment is a function of many factors, including the size of the relevant population, the proximity of participants to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments.
We are already advancing a multi-program clinical pipeline leveraging CpG 1018 adjuvant to develop improved vaccines in indications with unmet medical needs including Phase 1 clinical trials in shingles and Tdap, and a Phase 2 clinical trial for plague in collaboration with and fully funded by the U.S. Department of Defense (“DoD”).
We are already advancing a multi-program clinical pipeline leveraging CpG 1018 adjuvant to develop improved vaccines in indications with unmet medical needs including a Phase 1/2 clinical trial for shingles and additional clinical and manufacturing activities, including a Phase 2 clinical trial expected to initiate in the third quarter of 2025, for plague in collaboration with and fully funded by the U.S.
Certain provisions in the indenture governing the Convertible Notes may delay or prevent an otherwise beneficial takeover attempt of us. Certain provisions in the indenture governing the Convertible Notes may make it more difficult or expensive for a third party to acquire us.
Certain provisions in the indenture governing the Convertible Notes may make it more difficult or expensive for a third party to acquire us.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations, including our clinical trials; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or revision or restructuring of our operations.
Any of these events could have a material adverse effect on our reputation, business or financial condition, including but not limited to interruptions or stoppages in business operations (including clinical trials), inability to process personal data or to operate in certain jurisdictions, limited ability to develop or commercialize our products, expenditure of time and resources to defend any claim or inquiry or revision or restructuring of our operations.
In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. Tax law changes could adversely affect our business and financial condition.
Any of these outcomes could require us to change our business strategy and could materially impact our business, operations or financial condition. 45 If the combination of patents, trade secrets and contractual provisions that we rely on to protect our intellectual property is inadequate, the value of our products or product candidates may decrease, and we may be unable to realize any commercial benefit from the development of our products or product candidates.
If the combination of patents, trade secrets and contractual provisions that we rely on to protect our intellectual property is inadequate, the value of our products or product candidates may decrease, and we may be unable to realize any commercial benefit from the development of our products or product candidates.
We expect research and development costs to increase further if we add additional programs to our pipeline. Sales of CpG 1018 adjuvant generated significant revenue during the COVID-19 pandemic, but we do not expect such revenues to continue in the long term, and we did not recognize any CpG 1018 adjuvant revenue in the year ended December 31, 2023 .
Sales of CpG 1018 adjuvant generated significant revenue during the COVID-19 pandemic, but we do not currently expect such revenues to continue in the long term, and we did not recognize any CpG 1018 adjuvant revenue in the year ended December 31, 2023 nor December 31, 2024 .
Any reduction in reimbursement from Medicare or other government programs 44 may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products. In connection with our work with the U.S.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products. In connection with our work with the U.S.
For example, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.
There have been executive, legal and political challenges and amendments to certain aspects of ACA. For example, on August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.
If we are unable to adequately obtain or enforce proprietary rights, we may be unable to commercialize or continue to commercialize our products, enter into or maintain collaborations, generate revenues or maintain any advantage we may have with respect to existing or potential competitors. 47 We have in the past, and may in the future, rely on licenses to intellectual property from third parties.
If we are unable to adequately obtain or enforce proprietary rights, we may be unable to commercialize or continue to commercialize our products, enter into or maintain collaborations, generate revenues or maintain any advantage we may have with respect to existing or potential competitors.
However, in certain cases such protection may be limited, depending in part on existing patents held by third parties, or other disclosures which impact patentability, which may only allow us to obtain relatively narrow patent protection, if any at all.
We try to protect our proprietary rights by filing and prosecuting U.S. and foreign patent applications. 44 Table of Contents However, in certain cases such protection may be limited, depending in part on existing patents held by third parties, or other disclosures which impact patentability, which may only allow us to obtain relatively narrow patent protection, if any at all.
In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our common stock.
In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our common stock. 51 Table of Contents Certain provisions in the indenture governing the Convertible Notes may delay or prevent an otherwise beneficial takeover attempt of us.
Additional privacy advocates and industry groups have proposed, and may propose in the future, standards with which we are legally or contractually bound to comply. In addition to data privacy and security laws, we may be contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future.
In addition, privacy advocates and industry groups have proposed, and may propose, standards with which we are legally or contractually bound to comply or may become subject to in the future. Our obligations related to privacy and data security are quickly changing and becoming increasingly stringent, creating uncertainty.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe ISO is responsible for designing and promoting general security awareness and training, as well as defining and training relevant participants on our incident response processes. Our security and incident response processes include escalation and reporting to the CSIRT, Disclosure Committee, senior management and Audit Committee for certain information security incidents, as warranted under the circumstances.
Biggest changeOur security and incident response processes include escalation and reporting to the CSIRT, 56 Table of Contents Disclosure and Risk Committee, senior management and Audit Committee for certain information security incidents, as warranted under the circumstances.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to help manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: a corporate security incident response plan, a vulnerability management policy, incident detection and response processes, IT systems disaster recovery procedures, risk assessments, reasonable implementation of security controls in accordance with applicable security standards/certifications, encryption of data, network security controls, data segregation, access controls, physical security, asset management, tracking and disposal, systems monitoring, employee training, penetration testing, cybersecurity insurance, dedicated cybersecurity staff/officer.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to help manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: a corporate security incident response plan, a vulnerability management policy, a vendor risk management program, incident detection and response processes, IT systems disaster recovery procedures, risk assessments, reasonable implementation of security controls in accordance with applicable security standards/certifications, encryption of data, network security controls, data segregation, access controls, physical security, asset management, tracking and disposal, systems monitoring, employee training, penetration testing, cybersecurity insurance, dedicated cybersecurity staff/officer.
Our Senior Director of IT Infrastructure & Security also functions as our information security officer (“ISO”). The ISO (as part of our security function), along with our broader internal cybersecurity, IT infrastructure, and digital technology automation functions, as well as third-party service providers, all help identify, assess and manage our cybersecurity threats and risks.
Our Senior Director of IT Infrastructure & Security also functions as our information security officer (“ISO”). The ISO (as part of our security function), along with our management committee and broader internal cybersecurity, IT infrastructure, and digital technology automation functions, as well as third-party service providers, all help identify, assess and manage our cybersecurity threats and risks.
We also rely on third-party vendor backup/restore, disaster recovery and business continuity procedures as stated in the respective SOC 1 and SOC 2 reports if provided by such vendors as they pertain to certain of our managed services. Our procedures for assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes.
We also rely on third-party vendor backup/restore, disaster recovery and business continuity procedures as stated in the respective SOC 1 and SOC 2 reports if provided by such vendors as they pertain to certain of our managed services. 55 Table of Contents Our procedures for assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes.
We use third-party service providers to perform a variety of functions throughout our business, such as application service providers, software-as-a-service providers, hosting companies, contract research organizations, contract manufacturing organizations, distributors, and other supply chain resources. We have a vendor management process to help manage cybersecurity risks associated with our use of these providers.
We use third-party service providers to perform a variety of functions throughout our business, such as application service providers, software-as-a-service providers, hosting companies, contract research organizations, contract manufacturing organizations, distributors, and other supply chain resources. We have a vendor risk management program to help manage cybersecurity risks associated with our use of these providers.
In addition, depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, our vendor management process may involve different levels of assessment designed to help identify cybersecurity risks associated with a provider and impose contractual obligations related to cybersecurity on the provider. 56 For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors under Part 1.
In addition, depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, our vendor risk management program may involve different levels of assessment designed to help identify cybersecurity risks associated with a provider and impose contractual obligations related to cybersecurity on the provider.
Added
For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors under Part 1. Item 1A.
Added
The ISO is responsible for designing and promoting general security awareness and training, as well as defining and training relevant participants on our incident response processes.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeP ROPERTIES As of December 31, 2023, the following are the material properties that we occupy: Property Description Location Square Footage Owned or Leased Lease Expiration Date Corporate headquarters office Emeryville, CA 8,053 Leased July 31, 2025 Manufacturing and office space Düsseldorf, Germany 60,558 Leased December 31, 2031 Laboratory and office space Emeryville, CA 75,662 Leased (*) March 31, 2031 (*) The entire 75,662 square feet have been subleased to a third party.
Biggest changePROPERTIES As of December 31, 2024, the following are the material properties that we occupy: Property Description Location Square Footage Owned or Leased Lease Expiration Date Corporate headquarters office Emeryville, CA 8,053 Leased July 31, 2028 Manufacturing and office space Düsseldorf, Germany 75,727 Leased December 31, 2031 Laboratory and office space Emeryville, CA 75,662 Leased (*) March 31, 2031 (*) The entire 75,662 square feet have been subleased to a third party.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE S AFETY DISCLOSURE Not applicable. 57 PA RT II
Biggest changeMINE SAFETY DISCLOSURE Not applicable. 57 Table of Contents PART II
ITEM 3. LE GAL PROCEEDINGS From time to time in the ordinary course of business, we receive claims or allegations regarding various matters, including employment, vendor and other similar situations in the conduct of our operations. We are not currently aware of any material legal proceedings involving our Company. ITEM 4.
ITEM 3. LEGAL PROCEEDINGS From time to time in the ordinary course of business, we receive claims or allegations regarding various matters, including employment, vendor and other similar situations in the conduct of our operations. We are not currently aware of any material legal proceedings involving our Company. ITEM 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis Section is not “soliciting material,” is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any filing of Dynavax Technologies Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 58 Recent Sales of Unregistered Securities None.
Biggest changeCOMPANIES) $ 100.00 $ 121.30 $ 152.70 $ 122.50 $ 154.90 $ 192.90 NASDAQ BIOTECHNOLOGY INDEX $ 100.00 $ 125.70 $ 124.90 $ 111.30 $ 115.40 $ 113.80 This Section is not “soliciting material,” is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any filing of Dynavax Technologies Corporation under the 58 Table of Contents Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Stock Performance Graph The chart below compares total stockholder return on an investment of $100 in cash on December 31, 2018, for our common stock, the Nasdaq Stock Market (U.S. companies), and the Nasdaq Biotechnology Index. All values assume reinvestment of the full amount of all dividends.
Stock Performance Graph The chart below compares total stockholder return on an investment of $100 in cash on December 31, 2019, for our common stock, the Nasdaq Stock Market (U.S. companies), and the Nasdaq Biotechnology Index. All values assume reinvestment of the full amount of all dividends.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is traded on the Nasdaq Global Select Market under the ticker symbol “DVAX”.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is traded on the Nasdaq Global Select Market under the ticker symbol “DVAX.” As of February 18, 2025, there were approximately 39 holders of record of our common stock, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).
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As of February 20, 2024, there were approximately 39 holders of record of our common stock, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).
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ASSUMES $100 INVESTED ON DECEMBER 31, 2019 ASSUMES DIVIDENDS REINVESTED FISCAL YEAR ENDING DECEMBER 31, 2024 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 DYNAVAX TECHNOLOGIES CORPORATION $ 100.00 $ 77.80 $ 246.00 $ 186.00 $ 244.40 $ 223.30 NASDAQ STOCK MARKET (U.S.
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Issuer Purchases of Equity Securities None. ITEM 6. [RE SERVED] 59
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Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities In November 2024, our Board of Directors authorized a share repurchase program (the "Program") allowing us to repurchase up to $200.0 million of our common stock. On November 8, 2024, we entered into an accelerated share repurchase agreement (the "ASR Agreement") with Goldman Sachs & Co.
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LLC ("Goldman") to repurchase an aggregate amount of $100.0 million of our common stock.
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Under the ASR Agreement, we made an aggregate upfront payment of $100.0 million to Goldman and received an aggregate initial delivery of 6,149,116 shares of our common stock on November 12, 2024, representing 80% of the total shares that could be repurchased under the ASR Agreement based on the closing price of our common stock on November 8, 2024.
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The accelerated share repurchase terminated in February 2025. As of December 31, 2024, $100.0 million remained available for future repurchases under the Program.
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The following table provides information with respect to the shares of common stock repurchased by us during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Program (Dollars in millions) October 1, 2024 - October 31, 2024 - $ - - $ - November 1, 2024 - November 30, 2024 6,149,116 $ 13.01 6,149,116 $ 100.0 December 1, 2024 - December 31, 2024 - $ - - $ 100.0 Total 6,149,116 $ 13.01 ITEM 6. [RESERVED] 59 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

78 edited+16 added−24 removed61 unchanged
Biggest changeThis was offset by a $1.1 million expense related to an engineering run performed for product testing purposes in 2023. • CpG 1018 adjuvant development costs decreased as supply agreements were fulfilled for our collaborators utilizing CpG 1018 adjuvant in 2022. • Shingles program costs increased as we completed activities related to the Phase 1 clinical trial, including presentation of study results at a medical conference in June 2023, and due to trial start up activities, including manufacturing of clinical materials to support the expected initiation of a Phase 1/2 clinical trial in the first half of 2024. • Tdap costs decreased as we completed the Phase 1 clinical trial in early 2023, offset by an increase in activities to support initiation of a human challenge study expected in the second half of 2024. • Plague program costs increased compared to the previous year following our initiation of part 2 of the Phase 2 clinical trial in early 2023 and advancement into a nonhuman primate challenge study in August 2023. • Other program costs increased as we continue to invest in product candidates utilizing our CpG 1018 adjuvant through discovery efforts and through preclinical and clinical collaborations. • Non-cash stock-based compensation expense increased primarily due to the need for increased headcount to support the advancement of our clinical vaccine programs.
Biggest changeIn connection with the discontinued development of the Tdap-1018 program announced in November 2024, we do not expect to incur significant research and development expenses for this program in the future. • Plague program costs decreased with the completion of the Phase 2 clinical trial in the third quarter of 2024, as compared to higher costs incurred in early 2023 due to the initiation of Part 2 of the Phase 2 clinical trial. • HEPLISAV-B and CpG 1018 adjuvant development costs decreased due to the non-recurrence of a $1.1 million expense related to an engineering run performed for product testing purposes in 2023, partially offset by continued investment in clinical research and collaboration. • Other program costs increased as we continued to invest in product candidates utilizing our CpG 1018 adjuvant through discovery and preclinical efforts, including external collaborations. • Non-cash stock-based compensation expense increased primarily due to incremental headcount to support the advancement of our clinical vaccine programs.
The terms and conditions of the Clover Supply Agreement were operative through December 2022, and as of December 31, 2022, we had satisfied all delivery obligations thereunder.
The terms and conditions of the Clover Supply Agreement were operative through December 31, 2022, and as of December 31, 2022, we had satisfied all delivery obligations thereunder.
Bad Debt Expense We recorded $12.3 million of bad debt expense during the year ended December 31, 2023 in connection with the allowance for doubtful accounts of $12.3 million recorded with respect to outstanding accounts receivable from Bio E and relating to CpG 1018 Materials delivered under the Bio E Supply Agreement and CEPI Agreement.
We recorded $12.3 million of bad debt expense during the year ended December 31, 2023 in connection with the allowance for doubtful accounts of $12.3 million recorded with respect to outstanding accounts receivable from Bio E and relating to CpG 1018 Materials delivered under the Bio E Supply Agreement and CEPI Agreement.
The Bio E Amendment No. 3 provides for additional future payment of either $5.5 million in the event that Bio E receives at least $125.0 million, or $12.3 million in the event that Bio E receives at least $250.0 million in future payments from the Government of India associated with its CORBEVAX product on or before August 15, 2025.
The Bio E Amendment No. 3 provides for additional future payment of either $5.5 million in the event that Bio E receives at least $125.0 million, or $12.3 million in the event that Bio E receives at least $250.0 million in future payments from the Government of India associated with its CORBEVAX product on or before August 15, 2025.
Specifically, HEPLISAV-B product revenue has generally been, and will likely continue to be, lower in the fourth quarter of our fiscal year compared to the third quarter due to holiday schedules 62 and increased focus by healthcare providers on respiratory disease vaccines, including vaccines for influenza, COVID-19 and respiratory syncytial virus, during the fall and winter months.
Specifically, HEPLISAV-B product revenue has generally been, and will likely continue to be, lower in the fourth quarter of our fiscal year compared to the third quarter due to holiday schedules and increased focus by healthcare providers on respiratory disease vaccines, including vaccines for influenza, COVID-19 and respiratory syncytial virus, during the fall and winter months.
The terms and conditions of the Bio E Supply Agreement were operative through December 2022, and as of December 31, 2022 and we had satisfied all delivery obligations thereunder. As of December 31, 2023, we had no accounts receivable balance from Bio E.
The terms and conditions of the Bio E Supply Agreement were operative through December 2022, and as of December 31, 2022, we had satisfied all delivery obligations thereunder. As of December 31, 2024 and 2023, we had no accounts receivable balance from Bio E.
As of December 31, 2023, we had no CEPI-related net accounts receivable relating to Bio E. CEPI-related accruals and contract assets relating to Clover totaled $60.3 million and $71.3 million as of December 31, 2023, respectively.
As of December 31, 2024 and 2023, we had no CEPI-related net accounts receivable relating to Bio E. CEPI-related accruals and contract assets relating to Clover totaled $60.3 million and $71.3 million as of December 31, 2024 and 2023, respectively.
Approximately $71.3 million relating to future amounts receivable representing a contract asset from Clover in connection with the CEPI Agreement are classified as other assets (long term) as of December 31, 2023. The classification as long term reflects the timing of expected utilization of CpG 1018 adjuvant for Clover Product expected to be sold under the CEPI Agreement.
Approximately $71.3 million relating to future amounts receivable representing a contract asset from Clover in connection with the CEPI Agreement are classified as other assets (long term) as of December 31, 2024. The classification as long term reflects the timing of expected utilization of CpG 1018 adjuvant for Clover Product expected to be sold under the CEPI Agreement.
Corresponding Advance Payments of $60.3 million relating to Clover are recorded in CEPI accrual long-term in our consolidated balance sheets as of December 31, 2023. These Advance Payments may be repaid using cash collected from Clover or forgiven in accordance with the CEPI Agreement. We had no accounts receivable balance from Clover as of December 31, 2023.
Corresponding Advance Payments of $60.3 million relating to Clover are recorded in CEPI accrual long-term in our consolidated balance sheets as of December 31, 2024. These Advance Payments may be repaid using cash collected from Clover or forgiven in accordance with the CEPI Agreement. We had no accounts receivable balance from Clover as of December 31, 2024 and 2023.
We have entered into material purchase commitments with commercial manufacturers for the supply of HEPLISAV-B. In November 2013, we entered into a Commercial Manufacturing and Supply Agreement with Baxter Pharmaceutical Solutions LLC (“Baxter”) that was amended in September 2021 (as amended, the “Baxter Agreement”). Baxter provides formulation, fill and finish services and produces HEPLISAV-B for commercial use.
We have entered into material purchase commitments with commercial manufacturers for the supply of HEPLISAV-B. In November 2013, we entered into a Commercial Manufacturing and Supply Agreement with Baxter Pharmaceutical Solutions LLC (“Baxter”) that was amended in September 2021 and January 2025 (as amended, the “Baxter Agreement”). Baxter provides formulation, fill and finish services and produces HEPLISAV-B for commercial use.
The Bio E Supply Agreement also provides terms for Bio E to order 61 additional quantities of CpG 1018 adjuvant beyond the quantities reserved by CEPI.
The Bio E Supply Agreement also provides terms for Bio E to order additional quantities of CpG 1018 adjuvant beyond the quantities reserved by CEPI.
While we did not recognize any CpG 1018 adjuvant revenue in 2023, we could see new demand in the future if our collaborators work through their inventory on hand and need additional supply, or new programs utilizing our adjuvant advance to later stages up to and including commercialization.
While we did not recognize any CpG 1018 adjuvant revenue in 2024, we could see new demand in the future if our collaborators work through their inventory on hand and need additional supply, or new programs utilizing our adjuvant advance to later stages up to and including commercialization.
Under the agreement, we are conducting a Phase 2 clinical trial and studies combining our CpG 1018 adjuvant with the DoD's rF1V vaccine. We are being fully reimbursed by the DoD for the costs of this study, which is recorded in other revenue in our consolidated statements of operations.
Under the agreement, we conducted a Phase 2 clinical trial and studies combining our CpG 1018 adjuvant with the DoD's rF1V vaccine. We are being fully reimbursed by the DoD for the costs of this study which is recorded in other revenue in our consolidated statements of operations.
We currently anticipate that our cash and cash equivalents, and short-term marketable securities as of December 31, 2023, and anticipated revenues from HEPLISAV-B will be sufficient to fund our operations for at least the next 12 months from the date of this filing and in the longer term.
We currently anticipate that our cash and cash equivalents, and short-term marketable securities as of December 31, 2024, and anticipated revenues from HEPLISAV-B will be sufficient to fund our operations for at least the next 12 months from the date of this filing and in the longer term.
The Convertible Notes bear interest at a rate of 2.50% per year, payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021. The Convertible Notes mature on May 15, 2026, unless converted, redeemed or repurchased in accordance with their terms prior to such date.
The Convertible Notes bear interest at a rate of 2.5% per year, payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021. The Convertible Notes mature on May 15, 2026, unless converted, redeemed or repurchased in accordance with their terms prior to such date.
Other In May 2021, we issued $225.5 million aggregate principal amount of 2.50% convertible senior notes due in 2026 (the “Convertible Notes”) in a private placement. Total proceeds from the issuance of the Convertible Notes, net of debt issuance and offering costs of $5.7 million, were $219.8 million.
Convertible Notes In May 2021, we issued $225.5 million aggregate principal amount of 2.5% convertible senior notes due in 2026 (the “Convertible Notes”) in a private placement. Total proceeds from the issuance of the Convertible Notes, net of debt issuance and offering costs of $5.7 million, were $219.8 million.
The Convertible Notes bear interest at a rate of 2.50% per year, payable semiannually in arrears on May 15 and November 15 of each year. The Convertible Notes mature on May 15, 2026, unless converted, redeemed or repurchased in accordance with their terms prior to such date.
The Convertible Notes bear interest at a rate of 2.5% per year, payable semiannually in arrears on May 15 and November 15 of each year. The Convertible Notes mature on May 15, 2026, unless converted, redeemed or repurchased in accordance with their terms prior to such date.
The Bio E Amendments primarily established: (i) a new payment schedule for certain outstanding invoices related to the CEPI product to be the earlier of December 31, 2022, or receipt of certain amounts by Bio E from the Government of India in connection with their advance purchase agreement for CORBEVAX, and (ii) further modified the scope of the Bio E Supply Agreement, by reducing certain quantities of CpG 1018 adjuvant to be delivered.
The Bio E Amendments primarily established: (i) a 61 Table of Contents new payment schedule for certain outstanding invoices related to the CEPI product to be the earlier of December 31, 2022, or receipt of certain amounts by Bio E from the Government of India in connection with their advance purchase agreement for CORBEVAX, and (ii) further modified the scope of the Bio E Supply Agreement, by reducing certain quantities of CpG 1018 adjuvant to be delivered.
During the year ended December 31, 2023, we generated $100.6 million of cash from our operations, which consisted of a net loss of $6.4 million, a $46.7 million of net adjustments from non-cash items, which included stock-based compensation, depreciation and amortization, amortization of right-of-use assets, non-cash interest expense, accretion of discounts on marketable securities and bad debt expense, and approximately $61.2 million net changes from operating assets and liabilities, which included a decrease of $43.3 million in accounts and other receivables, net and an increase of $19.8 million in accrued and other liabilities.
By comparison, during the year ended December 31, 2023, we generated $100.6 million of cash from our operations, which consisted of a net loss of $6.4 million, $46.7 million of net adjustments from non-cash items, which included depreciation and amortization, amortization of right-of-use assets, amortization of premiums (accretion of discounts) on marketable securities, stock-based compensation expense, non-cash interest expense, bad debt expense, and approximately $61.2 million net changes from operating assets and liabilities, which included a decrease of $43.3 million in accounts and other receivables, net and a increase of $19.8 million in accrued and other liabilities.
Through December 31, 2023, we have received Advance Payments totaling approximately $175.0 million pursuant to the CEPI Agreement, of which $67.3 million have been repaid and $47.4 million have been forgiven (as discussed below).
Through December 31, 2024, we have received Advance Payments totaling approximately $175.0 million pursuant to the CEPI Agreement, of which $67.3 million have been repaid and $47.4 million have been forgiven (as discussed below).
We agreed to pay Cowen a commission of up to 3% of the gross sales proceeds of any common stock sold through Cowen under the ATM Agreement. As of December 31, 2023, we had approximately $120.0 million remaining under the ATM Agreement. 68 Prior to January 1, 2021, we incurred net losses in each year since our inception.
We agreed to pay Cowen a commission of up to 3% of the gross sales proceeds of any common stock sold through Cowen under the ATM Agreement. As of December 31, 2024, we had approximately $120.0 million remaining under the ATM Agreement. Prior to January 1, 2021, we incurred net losses in each year since our inception.
Accordingly, as of December 31, 2023, the CEPI-Bio E Assignment Agreement resulted in: (i) no accounts receivable balance, and (ii) the derecognition of $47.4 million CEPI accrual in connection with the Bio E CEPI Advance Payments.
Accordingly, as of December 31, 2024, the CEPI-Bio E Assignment Agreement resulted in: (i) no accounts receivable balance, and (ii) the derecognition of $47.4 million CEPI accrual in connection with the Bio E CEPI Advance Payments.
Pursuant to the Baxter Agreement, we are obligated to purchase an annual minimum number of batches of HEPLISAV-B through December 31, 2026, and there are certain limits on the number of batches that Baxter is required to produce.
Pursuant to the Baxter Agreement, we are obligated to purchase an annual minimum number of batches of HEPLISAV-B through December 31, 2029, and there are certain limits on the number of batches that Baxter is required to produce.
Our first marketed product, HEPLISAV-B® [Hepatitis B Vaccine (Recombinant), Adjuvanted], is approved in the United States, the European Union and Great Britain for the prevention of infection caused by all known subtypes of hepatitis B virus in adults aged 18 years and older. In May 2022, we commenced commercial shipments of HEPLISAV-B in Germany.
Our first marketed product, HEPLISAV-B® [Hepatitis B Vaccine (Recombinant), Adjuvanted], is approved in the United States, the European Union and the United Kingdom for the prevention of infection caused by all known subtypes of hepatitis B virus in adults aged 18 years and older. In May 2022, we commenced commercial shipments of HEPLISAV-B in Germany.
ITEM 7. MANAGEMENT’S DISCUSSIO N AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve a number of risks and uncertainties.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve a number of risks and uncertainties.
These programs include vaccine candidates under development for shingles, Tdap and plague. Additionally, we are working to advance product candidates utilizing our CpG 1018 adjuvant through discovery efforts and preclinical and clinical collaborations with third-party research organizations.
These programs include vaccine candidates under development for shingles and plague and additional vaccine programs in preclinical development. Additionally, we are working to advance product candidates utilizing our CpG 1018 adjuvant through discovery efforts and preclinical and clinical collaborations with third-party research organizations.
Sublease income was $7.6 million, $7.7 million and $7.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. Sublease income is included in other income (expense) in our consolidated statements of operations. Rent received from the subtenant in excess of rent paid to the landlord is shared by paying the landlord 50% of the excess rent.
Sublease income was $5.0 million, $7.6 million and $7.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. Sublease income is included in other income (expense) in our consolidated statements of operations. Rent received from the subtenant in excess of rent paid to the landlord is shared by paying the landlord 50% of the excess rent.
HEPLISAV-B is the only two-dose hepatitis B vaccine for adults approved in the U.S., the European Union and Great Britain. We have worldwide commercial rights to HEPLISAV-B and we market it in the United States and the European Union.
HEPLISAV-B is the only two-dose hepatitis B vaccine for adults approved in the U.S., the European Union and the United Kingdom. We have worldwide commercial rights to HEPLISAV-B and we market it in the United States and the European Union.
There are four other vaccines approved for the prevention of hepatitis B in the U.S.: Engerix-B and Twinrix® from GlaxoSmithKline plc, Recombivax-HB® from Merck & Co and PreHevbrio™ from VBI Vaccines Inc.
There are four other vaccines approved for the prevention of hepatitis B in the U.S.: Engerix-B and 60 Table of Contents Twinrix® from GlaxoSmithKline plc, Recombivax-HB® from Merck & Co and PreHevbrio™ from VBI Vaccines Inc.
Results of Operations This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Results of Operations This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Liquidity and Capital Resources As of December 31, 2023, we had $742.3 million in cash and cash equivalents, and marketable securities. Since our inception, we have relied primarily on the proceeds from public and private sales of our equity securities, borrowings, government grants and revenues from product sales and collaboration agreements to fund our operations.
Liquidity and Capital Resources As of December 31, 2024, we had $713.8 million in cash and cash equivalents and marketable securities. Since our inception, we have relied primarily on the proceeds from public and private sales of our equity securities, borrowings, government grants and revenues from product sales and collaboration agreements to fund our operations.
As of December 31, 2023, our aggregate minimum commitment under the Baxter Agreement was $11.4 million within the next 12 months, and $24.5 million beyond the next 12 months. On September 7, 2023 (the “Effective Date”), we entered into an agreement (the “Avecia Supply Agreement”) with Nitto Denko Avecia Inc.
As of December 31, 2024, our aggregate minimum commitment under the Baxter Agreement was $17.0 million within the next 12 months, and $55.4 million beyond the next 12 months. On September 7, 2023 (the “Effective Date”), we entered into an agreement (the “Avecia Supply Agreement”) with Nitto Denko Avecia Inc.
During the year ended December 31, 2023, net cash used in investing activities was $153.9 million compared to $316.0 million of cash used in investing activities for the year ended December 31, 2022.
During the year ended December 31, 2024, net cash used in investing activities was $18.0 million compared to $153.9 million of cash used in investing activities for the year ended December 31, 2023.
For the year ended December 31, 2023, we recorded a net loss of $6.4 million. For the year ended December 31, 2022, we recorded a net income of $293.2 million. We cannot be certain that sales of our products, and the revenue from our other activities will be sustainable.
For the year ended December 31, 2024, we recorded a net income of $27.3 million. For the year ended December 31, 2023, we recorded a net loss of $6.4 million. We cannot be certain that sales of our products, and the revenue from our other activities will be sustainable.
The CEPI Agreement enables CEPI to direct the supply of CpG 1018 adjuvant to CEPI partner(s). In exchange for reserving CpG 1018 adjuvant, CEPI has agreed to provide advance payments in the form of an interest-free, unsecured, forgivable loan (the “Advance Payments”) of up to $176.4 million.
In May 2021, we entered into the first amendment to the CEPI Agreement. The CEPI Agreement enables CEPI to direct the supply of CpG 1018 adjuvant to CEPI partner(s). In exchange for reserving CpG 1018 adjuvant, CEPI has agreed to provide advance payments in the form of an interest-free, unsecured, forgivable loan (the “Advance Payments”) of up to $176.4 million.
These additional amounts are not considered collectible until the achievement of these future milestones. As of December 31, 2023, the aggregate principal amount of our Convertible Notes was $225.5 million, excluding debt discount of $2.8 million.
These additional amounts are not considered collectible until the achievement of these future milestones. As of December 31, 2024, the aggregate principal amount of our Convertible Notes was $225.5 million, excluding debt discount of $1.6 million.
Approximately $76.5 million of the increase was primarily due to higher volume driven by continued improvement in market share, particularly in the integrated delivery networks and retail segments, and growth in the U.S. hepatitis-B vaccine market related to the Advisory Committee on Immunization Practices ("ACIP") universal recommendation. Approximately $10.9 million of the increase was due to higher net sales price.
Approximately $40.3 million of the increase was due to higher volume driven by continued improvement in market share, particularly in the integrated delivery networks and retail segments, and growth in the U.S. hepatitis-B vaccine market related to the Advisory Committee on Immunization Practices ("ACIP") universal recommendation. Approximately $14.8 million of the increase was due to higher net sales price.
On April 26, 2023, we entered into a third amendment to the Bio E Supply Agreement (the “Bio E Amendment No. 3”), and on April 27, 2023, we entered into the CEPI-Bio E Assignment Agreement.
On April 26, 2023, we entered into a third amendment to the Bio E Supply Agreement (the “Bio E Amendment No. 3”), and on April 27, 2023, we entered into the waiver and second amendment to the CEPI Agreement by and between us and CEPI (the "CEPI-Bio E Assignment Agreement").
As of December 31, 2023, remaining Advance Payments totaling $60.3 million were reflected in CEPI accrual long-term in our consolidated balance sheets, representing the outstanding balance of the Advance Payments relating to the Clover Supply Agreement (as defined and discussed below). As of December 31, 2022, we recorded Advance Payments of $107.7 million included in CEPI accrual.
As of December 31, 2024, remaining Advance Payments totaling $60.3 million were reflected in CEPI accrual long-term in our consolidated balance sheets, representing the outstanding balance of the Advance Payments relating to the Clover Supply Agreement (as defined and discussed below).
Overall, cash provided by our operations during the year ended December 31, 2023 increased by $37.8 million compared to the same period in December 31, 2022. Net cash provided by operating activities is also impacted by changes in our operating assets and liabilities due to timing of cash receipts and expenditures.
Overall, cash provided by our operations during the year ended December 31, 2024 decreased by $34.1 million compared to the same period in December 31, 2023. Net cash provided by operating activities is also impacted by changes in our operating assets and liabilities due to timing of cash receipts and expenditures.
The purchasers also partially exercised their option to purchase additional Convertible Notes in May 2021 and we issued an additional $25.5 million of the Convertible Notes. As of December 31, 2023, the aggregate principal amount of our Convertible Notes was $225.5 million, excluding debt discount of $2.8 million.
The purchasers also partially exercised their option to purchase additional Convertible Notes 69 Table of Contents in May 2021 and we issued an additional $25.5 million of the Convertible Notes. As of December 31, 2024, the aggregate principal amount of our Convertible Notes was $225.5 million, excluding debt discount of $1.6 million.
If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.
Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.
We recorded the proceeds as gain on sale of assets in our consolidated statements of operations. We paid Holdings $0.5 million in each of September 2021, May 2022 and October 2023. We included the payments in selling, general and administrative expenses in our consolidated statements of operations. No liability has been recorded under this agreement as of December 31, 2023.
We recorded the proceeds as gain on sale of assets in our consolidated statements of operations. We paid Holdings $0.5 million in each of September 2021, May 2022 and October 2023. We included the payments in selling, general and administrative expenses in our consolidated statements of operations.
As of December 31, 2023, our aggregate minimum commitment for the supply of CpG 1018 adjuvant under the Avecia Supply Agreement was $7.4 million for the 12 months following December 31, 2023.
As of December 31, 2024, our aggregate minimum commitment for the supply of CpG 1018 adjuvant under the Avecia Supply Agreement was $8.2 million for the 12 months following December 31, 2024.
Revenue Recognition Product Revenue, Net – HEPLISAV-B We recognize revenue when we transfer control of promised goods to the customer at the net sales price, which includes estimates such as product returns, chargebacks, discounts, rebates and other fees.
Revenue Recognition Product Revenue, Net – HEPLISAV-B We recognize revenue at net sales prices when control of the promised goods is transferred to the customer, incorporating estimates such as product returns, chargebacks, discounts, rebates and other fees.
Our income tax expense of $2.0 million and $1.1 million for the years ended December 31, 2023 and 2022 which is primarily comprised of state and foreign income tax expense. Our effective tax rate for the year ended December 31, 2023 was (46.3)%, which is primarily comprised of state and foreign income tax expense.
Our income tax expense of $3.5 million and $2.0 million for the years ended December 31, 2024 and 2023, respectively, are primarily comprised of state and foreign income tax expense. Our effective tax rate for the years ended December 31, 2024 and 2023 was 11.5% and (46.3)%, respectively, which is primarily comprised of state and foreign income tax expense.
Limited (“Bio E”), for the commercial supply of CpG 1018 adjuvant, for use with Bio E’s subunit COVID-19 vaccine candidate, CORBEVAX™. Under the Bio E Supply Agreement, Bio E previously committed to purchase specified quantities of CpG 1018 adjuvant at pre-negotiated prices pursuant to the CEPI Agreement, for use in Bio E’s commercialization of its CORBEVAX vaccine.
Under the Bio E Supply Agreement, Bio E previously committed to purchase specified quantities of CpG 1018 adjuvant at pre-negotiated prices pursuant to the CEPI Agreement, for use in Bio E’s commercialization of its CORBEVAX vaccine.
Other Income (Expense) Interest income is reported net of amortization of premiums and discounts on marketable securities and includes realized gains on investments. Interest expense includes the stated interest and accretion of discount of our Convertible Notes. Sublease income is recognized in connection with our sublease of office and laboratory space.
Other Income (Expense) Interest income is reported net of amortization of premiums and discounts on marketable securities and includes realized gains on investments. Interest expense includes the stated interest and accretion of discount of our Convertible Notes.
See Note 9 - Collaborative Research, Development and License Agreements, in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
These additional amounts are not considered collectible until the achievement of these future milestones. See Note 9 - Collaborative Research, Development and License Agreements, in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
See Note 2 - Summary of Significant Accounting Policies, in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a summary of our significant accounting policies.
Recent Accounting Pronouncements See Note 2 – Summary of Significant Accounting Policies, in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for information regarding recent accounting pronouncements that are of significance, or potential significance to us.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 202 3 . 63 Table of Contents Revenues Revenues consist of amounts earned from product sales and other revenues.
Cost of Sales – Product Cost of sales - product, consists primarily of raw materials, certain fill, finish and overhead costs, and any inventory adjustment charges for HEPLISAV-B and inventory costs to produce CpG 1018 adjuvant for our collaboration partners.
Cost of Sales – Product Cost of sales - product consists primarily of raw materials, certain fill, finish and overhead costs and any inventory adjustment charges for HEPLISAV-B.
Generally, we are only obligated to pay for actual time spent and materials consumed by the organizations at any point in time during the contract through the notice period. 70 In conjunction with our agreement with Symphony Dynamo, Inc. and Symphony Dynamo Holdings LLC (“Holdings”) in November 2009, we agreed to make contingent cash payments to Holdings equal to 50% of the first $50 million from any upfront, pre-commercialization milestone or similar payments received by us from any agreement with any third party with respect to the development and/or commercialization of cancer and hepatitis C therapies originally licensed to Symphony Dynamo, Inc., including our immune-oncology compound, SD-101.
In conjunction with our agreement with Symphony Dynamo, Inc. and Symphony Dynamo Holdings LLC (“Holdings”) in November 2009, we agreed to make contingent cash payments to Holdings equal to 50% of the first $50.0 million from any upfront, pre-commercialization milestone or similar payments received by us from any agreement with any third party with respect to the development and/or commercialization of cancer and hepatitis C therapies originally licensed to Symphony Dynamo, Inc., including our immune-oncology compound, SD-101.
We believe this has helped create a significantly expanded total annual market opportunity of approximately $800 million in the U.S. by 2027, with HEPLISAV-B well positioned to achieve a majority market share.
We believe this has helped create a significantly expanded total annual market opportunity of approximately $900.0 million in the U.S. by 2030, with HEPLISAV-B expected to achieve at least 60% total market share.
Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of compensation and related costs for our commercial support personnel, medical education professionals and personnel in executive and other administrative functions, including legal, finance and information technology; costs for outside services such as sales and marketing, post-marketing studies of HEPLISAV-B, accounting, commercial development, consulting, business development, investor relations and insurance; legal costs that include corporate and patent-related expenses; allocated facility costs and non-cash stock-based compensation.
As we continue to progress our clinical-stage pipeline, we expect research and development expenses to continue to represent a substantial portion of our expenses and to continue to increase, both in dollar amount and proportion of total expense, in future years. 65 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of compensation and related costs for our commercial support personnel, medical education professionals and personnel in executive and other administrative functions, including legal, finance and information technology; costs for outside services such as sales and marketing, post-marketing studies of HEPLISAV-B, accounting, commercial development, consulting, business development, investor relations, insurance, and legal costs that include corporate and patent-related expenses; allocated facility costs; and non-cash stock-based compensation.
During the year ended December 31, 2023, we recognized $17.6 million of revenue from our agreement with the DoD.
Other revenue primarily includes revenue from our agreement with the DoD. During the years ended December 31, 2024 and 2023, we recognized $8.6 million and $17.6 million of revenue from our agreement with the DoD, respectively.
Cash used in investing activities during the year ended December 31, 2023 included $150.8 million of net purchases of marketable securities compared to $309.9 million of net purchases of marketable securities for the year ended December 31, 2022. During the year ended December 31, 2023, net cash provided by financing activities was $1.4 million.
Cash used in investing activities during the year ended December 31, 2024 included $11.7 million of net purchases of marketable securities, compared to $150.8 million of net purchases of marketable securities for the year ended December 31, 2023.
CpG 1018® Adjuvant Supply for COVID-19 Vaccines In January 2021, we entered into an agreement (together with subsequent amendments, the "CEPI Agreement") with Coalition for Epidemic Preparedness Innovations (“CEPI”) for the manufacture and reservation of a specified quantity of CpG 1018 adjuvant. In May 2021, we entered into the first amendment to the CEPI Agreement.
For the year ended December 31, 2024, HEPLISAV-B product revenue, net was $268.4 million. CpG 1018® Adjuvant Supply for COVID-19 Vaccines In January 2021, we entered into an agreement (together with subsequent amendments, the "CEPI Agreement") with Coalition for Epidemic Preparedness Innovations (“CEPI”) for the manufacture and reservation of a specified quantity of CpG 1018 adjuvant.
Research and Development Expenses Research and development expenses are tracked on a program-by-program basis and consist primarily of costs incurred for the continued research and development of HEPLISAV-B and CpG 1018 adjuvant, clinical product candidates and preclinical studies, which include but are not limited to, compensation and related personnel costs (which include benefits, recruitment and travel costs), expenses incurred under agreements with contract research organizations, contract manufacturing organizations and service providers that assist in conducting clinical studies and costs associated with our preclinical activities, development activities and regulatory operations.
The decrease was primarily due to lower per-unit manufacturing costs as a result of previous process improvements and lower comparative one-time charges, partially offset by the increase in HEPLISAV-B sales volume. 64 Table of Contents Research and Development Expenses Research and development expenses are tracked on a program-by-program basis and consist primarily of costs incurred for the continued research and development of HEPLISAV-B and CpG 1018 adjuvant, clinical product candidates and preclinical studies, which include but are not limited to, compensation and related personnel costs (which include benefits, recruitment and travel costs), expenses incurred under agreements with contract research organizations, contract manufacturing organizations and service providers that assist in conducting clinical studies and costs associated with our preclinical activities, including engineering activities at our manufacturing facility in Düsseldorf related to functional improvements of our product and process advances, development activities and regulatory operations.
These optional periods have not been considered in 69 the determination of the Right-of-use (“ROU”) assets or lease liabilities associated with these leases as we did not consider the exercise of these options to be reasonably certain. We also sublease one of our leased premises to a third party.
Certain of these leases also include renewal options at our election to renew or extend the lease for two successive five-year terms. These optional periods have not been considered in the determination of the Right-of-use (“ROU”) assets or lease liabilities associated with these leases as we did not consider the exercise of these options to be reasonably certain.
The following is a summary of our cost of sales - product (in thousands, except for percentages): Increase (Decrease) from Year Ended December 31, 2022 to 2023 Cost of Sales - Product: 2023 2022 $ % HEPLISAV-B $ 50,167 $ 40,131 $ 10,036 25 % CpG 1018 adjuvant - 222,022 (222,022 ) (100 )% Total cost of sales - product $ 50,167 $ 262,153 $ (211,986 ) (81 )% HEPLISAV-B cost of sales-product increased by $10.0 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The following is a summary of our cost of sales - product (in thousands, except for percentages): Year Ended December 31, Increase (Decrease) from 2023 to 2024 Cost of Sales - Product: 2024 2023 $ % HEPLISAV-B $ 49,445 $ 50,167 $ (722) (1) % Total cost of sales - product $ 49,445 $ 50,167 $ (722) (1) % HEPLISAV-B cost of sales-product decreased by $0.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We lease and sublease certain manufacturing and office space with lease terms ranging from 3 to 12 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at our election to renew or extend the lease for two successive five-year terms.
Contractual Obligations We lease our facilities in Emeryville, California and Düsseldorf, Germany. We lease and sublease certain manufacturing and office space with lease terms ranging from 3 to 12 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term.
In March 2023, we received marketing authorization in Great Britain for HEPLISAV-B for the active immunization against hepatitis B virus infection caused by all known subtypes of hepatitis B virus in adults aged 18 years and older. 60 All of our HEPLISAV-B sales in the U.S. are to certain wholesalers and specialty distributors whose principal customers include independent hospitals and clinics, integrated delivery networks, public health clinics and prisons, the Department of Defense, the Department of Veterans Affairs and retail pharmacies.
All of our HEPLISAV-B sales in the U.S. are to certain wholesalers and specialty distributors whose principal customers include independent hospitals and clinics, integrated delivery networks, public health clinics and prisons, the Department of Defense, the Department of Veterans Affairs and retail pharmacies. All of our HEPLISAV-B sales in Germany are to one distributor.
The following is a summary of our research and development expenses (in thousands, except for percentages): Increase (Decrease) from Year Ended December 31, 2022 to 2023 Program Expenses: 2023 2022 $ % HEPLISAV-B development $ 3,486 $ 3,973 $ (487 ) (12 )% CpG 1018 adjuvant development 2,140 2,379 (239 ) (10 )% Tetanus, diphtheria, and acellular pertussis 6,620 8,994 (2,374 ) (26 )% Shingles 14,252 13,943 309 2 % Plague (1) 8,319 4,065 4,254 105 % Other 8,210 5,421 2,789 51 % Other Research and Development Expenses: Facility costs 2,574 1,871 703 38 % Non-cash stock-based compensation 9,285 5,954 3,331 56 % Total research and development $ 54,886 $ 46,600 $ 8,286 18 % 65 (1) In September 2021, we entered into an agreement with the DoD for the development of a recombinant plague vaccine adjuvanted with CpG 1018.
The following is a summary of our research and development expenses (in thousands, except for percentages): Year Ended December 31, Increase (Decrease) from 2023 to 2024 Program Expenses: 2024 2023 $ % Shingles 19,880 14,252 5,628 39 % Tdap 4,121 6,620 (2,499) (38) % Plague (1) 4,020 8,319 (4,299) (52 %) HEPLISAV-B and CpG 1018 adjuvant development 5,183 5,626 (443) (8 %) Other 13,759 8,210 5,549 68 % Other Research and Development Expenses: Facility costs 2,738 2,574 164 6 % Non-cash stock-based compensation 11,849 9,285 2,564 28 % Total research and development $ 61,550 $ 54,886 $ 6,664 12 % (1) In September 2021, we entered into an agreement with the DoD for the development of a recombinant plague vaccine utilizing CpG 1018 adjuvant.
Our assumptions of future demand for our products are inherently uncertain and if we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of inventory reserves that we report in a particular period. 63 Recent Accounting Pronouncements See Note 2 – Summary of Significant Accounting Policies, in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for information regarding recent accounting pronouncements that are of significance, or potential significance to us.
Our assumptions of future demand for our products are inherently uncertain and if we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of inventory reserves that we report in a particular period.
Revenues Revenues consist of amounts earned from product sales and other revenues. Product revenue, net, includes sales of HEPLISAV-B and CpG 1018 adjuvant. Revenue from HEPLISAV-B product sales is recorded at the net sales price, which includes estimates of product returns, chargebacks, discounts, rebates and other fees.
Product revenue, net, consists of sales of HEPLISAV-B. Revenue from HEPLISAV-B product sales is recorded at the net sales price, which includes estimates of product returns, chargebacks, discounts, rebates and other fees. Overall, product revenue, net, reflects our best estimates of the amount of consideration to which we are entitled based on the terms of the contracts.
There were no warrants outstanding as of December 31, 2023. • The change in other is primarily due to foreign currency transactions and related fluctuations in the value of the Euro compared to the U.S. dollar. 67 Income Taxes Our income tax expense and effective income tax rate were as follows (in thousands, except for percentages): Increase (Decrease) from Year Ended December 31, 2022 to 2023 2023 2022 $ % Income tax expense $ 2,022 $ 1,143 $ 879 77 % Effective income tax rate (46.3 )% 0.4 % - - Income tax expense increased by $0.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Income Taxes Our income tax expense and effective income tax rate were as follows (in thousands, except for percentages): Year Ended December 31, Increase (Decrease) from 2023 to 2024 2024 2023 $ % Income tax expense $ 3,546 $ 2,022 $ 1,524 75 % Effective income tax rate 11.5 % (46.3) % — — Income tax expense increased by $1.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We expect our selling, general and administrative expenses to increase in future periods to support the overall growth in our business.
We expect our selling, general, and administrative expenses to remain consistent in future periods as we continue to support the overall growth of our business. Bad Debt Expense We did not record bad debt expense during the year ended December 31, 2024.
During the year ended December 31, 2022, net cash provided by financing activities was $19.5 million.
During the year ended December 31, 2024, net cash used in financing activities was $102.0 million compared to $1.4 million of cash provided by financing activities for the year ended December 31, 2023.
By comparison, during the year ended December 31, 2022, we generated $62.7 million of cash from our operations, which consisted of our net income of $293.2 million, a $69.0 million of net adjustments from non-cash items, which included stock-based compensation, change in fair value of warrant liability, non-cash interest expense, depreciation and amortization, amortization of right-of-use assets, accretion of discount on marketable securities and inventory write-off, and approximately $298.4 million net changes from operating assets and liabilities, which included $349.9 million decrease in deferred revenue due to the fulfillment of our obligations to deliver CpG 1018 adjuvant to our collaboration partners, $24.8 million decrease in accrued liabilities and other liabilities, $159.7 million decrease in prepaid manufacturing, which converted into CpG 1018 adjuvant inventory during 2022, $32.4 million increase in inventories and $21.1 million decrease in CEPI accrual.
During the year ended December 31, 2024, we generated $66.5 million of cash from our operations, which consisted of a net income of $27.3 million, $55.2 million of net adjustments from non-cash items, which included depreciation and amortization, amortization of right-of-use assets, inventory write off, sublease termination loss, amortization of premiums (accretion of discounts) on marketable securities, stock-based compensation expense, non-cash interest expense, and approximately $16.0 million net changes from operating assets and liabilities, which included an 68 Table of Contents increase of $19.9 million in inventories primarily related to higher number of batches produced, an increase of $3.1 million in prepaid assets and other current assets primarily related to interest receivable, prepaid taxes, and prepaid insurance, a decrease of $4.4 million in lease liabilities, and an increase of $11.0 million in accrued and other liabilities.
The following is a summary of our revenues (in thousands, except for percentages): Increase (Decrease) from Year Ended December 31, 2022 to 2023 Revenues: 2023 2022 $ % HEPLISAV-B $ 213,295 $ 125,937 $ 87,358 69 % CpG 1018 adjuvant - 587,708 (587,708 ) (100 )% Total product revenue, net 213,295 713,645 (500,350 ) (70 )% Other revenue 18,989 9,038 9,951 110 % Total revenues $ 232,284 $ 722,683 $ (490,399 ) (68 )% HEPLISAV-B product revenue increased by $87.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The following is a summary of our revenues (in thousands, except for percentages): Year Ended December 31, Increase (Decrease) from 2023 to 2024 Revenues: 2024 2023 $ % HEPLISAV-B $ 268,430 $ 213,295 $ 55,135 26 % Total product revenue, net 268,430 213,295 55,135 26 % Other revenue 8,816 18,989 (10,173) (54) % Total revenues $ 277,246 $ 232,284 $ 44,962 19 % HEPLISAV-B product revenue increased by $55.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
As of December 31, 2023, the CEPI-related accrual relating to Clover may be repaid using cash to be collected from Clover or forgiven in accordance with the CEPI Agreement. On April 26, 2023, we entered into the Bio E Amendment No. 3, and on April 27, 2023, we entered into the CEPI-Bio E Assignment Agreement.
On April 26, 2023, we entered into the Bio E Amendment No. 3, and on April 27, 2023, we entered into the CEPI-Bio E Assignment Agreement.
We did not recognize CpG 1018 adjuvant net product revenue from Clover for the year ended December 31, 2023. We recognized CpG 1018 adjuvant net product revenue of $288.0 million from Clover for the year ended December 31, 2022. In July 2021, we entered into an agreement (together with subsequent amendments, the “Bio E Supply Agreement”) with Biological E.
In July 2021, we entered into an agreement (together with subsequent amendments, the “Bio E Supply Agreement”) with Biological E. Limited (“Bio E”), for the commercial supply of CpG 1018 adjuvant, for use with Bio E’s subunit COVID-19 vaccine candidate, CORBEVAX™.
The following is a summary of our selling, general and administrative expenses (in thousands, except for percentages): Increase (Decrease) from Year Ended December 31, 2022 to 2023 Selling, General and Administrative: 2023 2022 $ % Compensation and related personnel costs $ 63,937 $ 52,865 $ 11,072 21 % Outside services 47,374 41,049 6,325 15 % Legal costs 3,981 2,223 1,758 79 % Facility costs 8,585 12,153 (3,568 ) (29 )% Non-cash stock-based compensation 29,069 23,118 5,951 26 % Total selling, general and administrative $ 152,946 $ 131,408 $ 21,538 16 % Selling, general and administrative expenses increased by $21.5 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. • Compensation and related personnel costs and non-cash stock-based compensation costs increased due to continued headcount and personnel investments in our general and administrative and field sales functions to support business growth and increased travel. 66 • Outside services increased due to more targeted commercial and marketing efforts to increase market share and maximize the opportunities presented by the ACIP's universal recommendation. • Legal costs increased due to ongoing general legal activities supporting our continued growth and intellectual property activities supporting our clinical-stage pipeline. • Facility costs decreased due to lower rent expense, as one of our leases expired in 2022, and lower depreciation expense related to furniture and fixtures fully depreciated in 2022. • Non-cash stock-based compensation expense increased primarily due to increased headcount of our field sales team.
The following is a summary of our selling, general and administrative expenses (in thousands, except for percentages): Selling, General and Administrative: Year Ended December 31, Increase (Decrease) from 2023 to 2024 2024 2023 $ % Compensation and related personnel costs $ 69,978 $ 63,937 $ 6,041 9 % Outside services 56,268 51,355 4,913 10 % Facility costs 8,723 8,585 138 2 % Non-cash stock-based compensation 35,405 29,069 6,336 22 % Total selling, general and administrative $ 170,373 $ 152,946 $ 17,427 11 % Selling, general and administrative expenses increased by $17.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. • Compensation and related personnel costs and non-cash stock-based compensation costs increased due to continued investments in headcount and personnel across commercial and administrative functions to support HEPLISAV-B and pipeline growth. • Outside services increased primarily due to continued investments in commercial efforts designed to increase HEPLISAV-B market share.
Research and development expenses increased by $8.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. • HEPLISAV-B development costs decreased due to lower clinical costs following the completion of the HEPLISAV-B dialysis study and lower other HEPLISAV-B related development costs.
Research and development expenses increased by $6.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. • Shingles program costs increased primarily due to increased clinical expenses related to the initiation of a Phase 1/2 clinical trial and the completion of patient enrollment in the study in the fourth quarter of 2024. • Tdap program costs decreased, as we completed the long-term Phase 1 extension study in the third quarter of 2024.
The following is a summary of our other income (expense) (in thousands, except for percentages): Increase (Decrease) from Year Ended December 31, 2022 to 2023 2023 2022 $ % Interest income $ 31,993 $ 7,912 $ 24,081 304 % Interest expense $ (6,757 ) $ (6,732 ) $ 25 (0 )% Sublease income $ 7,577 $ 7,685 $ (108 ) (1 )% Change in fair value of warrant liability $ - $ 1,801 $ (1,801 ) (100 )% Other $ (152 ) $ 111 $ (263 ) (237 )% • Interest income increased due to higher yields and balances in our marketable securities portfolio. • The change in the fair value of warrant liability resulted primarily from the warrants, which expired in February 2022.
Sublease income is recognized in connection with our sublease of office and laboratory space. 66 Table of Contents The following is a summary of our other income (expense) (in thousands, except for percentages): Year Ended December 31, Increase (Decrease) from 2023 to 2024 2024 2023 $ % Interest income $ 36,464 $ 31,993 $ 4,471 14 % Interest expense $ (6,794) $ (6,757) $ 37 1 % Sublease income $ 5,014 $ 7,577 $ (2,563) (34 %) Other $ 293 $ (152) $ 445 (293 %) • Interest income increased due to higher yields and balances in our marketable securities portfolio. • The decrease in sublease income is primarily due to the recognition of a net loss of $3.5 million during the first quarter of 2024 in connection with a sublease termination, offset by sublease income of $8.5 million during the year ended December 31, 2024.
We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.
We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. 62 Table of Contents See Note 2 - Summary of Significant Accounting Policies, in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a summary of our significant accounting policies.
The excess rent is considered a variable lease payment and the total estimated payments are being recognized as additional rent expense on a straight-line basis. In May 2021, we issued $200.0 million aggregate principal amount of 2.50% convertible senior notes due 2026 in a private placement.
The excess rent is considered a variable lease payment and the total estimated payments are being recognized as additional rent expense on a straight-line basis. On February 22, 2024, our third-party subtenant obtained the approval of a voluntary petition for relief under Chapter 11 of the United States Code.
Removed
All of our HEPLISAV-B sales in Germany are to one distributor. For the year ended December 31, 2023, HEPLISAV-B product revenue, net was $213.3 million.
Added
We are currently focused on our efforts to drive long-term shareholder value by maximizing utilization of our HEPLISAV-B® hepatitis B vaccine, expanding our own portfolio of innovative vaccine candidates leveraging our proven adjuvant technology, and leveraging our CpG 1018® adjuvant supply strategy through both commercial and research collaborations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed6 unchanged
Biggest changeTo assess our risk, we calculate that if interest rates were to rise or fall from current levels by 100 basis points or by 125 basis points, the pro forma change in fair value of investments would be $7.0 million or $9.0 million as of December 31, 2023, compared to $4.1 million or $5.1 million as of December 31, 2022, respectively.
Biggest changeTo assess our risk, we calculate that if interest rates were to rise or fall from current levels by 100 basis points or by 125 basis points, the pro forma change in fair value of investments would be $9.0 million or $12.0 million as of December 31, 2024, compared to $7.0 million or $9.0 million as of December 31, 2023, respectively.
As of December 31, 2023 and 2022, the effect of our exposure to these exchange rate fluctuations has not been material, and we do not expect it to become material in the foreseeable future. We do not hedge our foreign currency exposures and have not used derivative financial instruments for speculation or trading purposes. 71
As of December 31, 2024 and 2023, the effect of our exposure to these exchange rate fluctuations has not been material, and we do not expect it to become material in the foreseeable future. We do not hedge our foreign currency exposures and have not used derivative financial instruments for speculation or trading purposes. 71 Table of Contents
The cumulative translation adjustment reported in the consolidated balance sheet as of December 31, 2023 and 2022 was a $3.0 million and $4.0 million loss, respectively, primarily related to the translation of Dynavax GmbH assets, liabilities and operating results from Euros to U.S. dollars.
The cumulative translation adjustment reported in the consolidated balance sheet as of December 31, 2024 and 2023 was a $5.3 million and $3.0 million loss, respectively, primarily related to the translation of Dynavax GmbH assets, liabilities and operating results from Euros to U.S. dollars.

Other DVAX 10-K year-over-year comparisons