Dynavax Technologies Corporation (NASDAQ:DVAX) Looks Like A PDUFA Winner

There are few markets as inefficient as the development stage biotechnology sector. Sure, prices respond quickly to available information. Some will argue this is efficiency. It's not, however. Not when the response to said information is so variable across different market operators. What looks like a death knell to one trader looks like an opportunity to another, and this is what makes the space so interesting – and choc full of opportunity.One such opportunity lies in Dynavax Technologies Corporation (NASDAQ:DVAX). This is a stock that traders love to hate. For the past twelve months and more, it's been repeatedly beaten down based on a drawn out approval pathway for its lead hepatitis B asset – Heplisav B.It's been traded down, sure, but at no point has the FDA stated outright it's not going to approve the drug. There's not really been any indication as such. The agency issued a CRL late last year, marking the second of its type, and there have been some concerns about the drug's potential to cause autoimmune conditions as a side effect. The company's response to the CRL basically negated these concerns, however, and the more delay really only came about because the FDA didn’t have time to review some fresh safety data (again, related to the above concerns) before its prescheduled PDUFA.What we are saying here is that the raised issues are with the FDA, and the FDA review process, and not directly related to Heplisav. As such, as the company has been repeatedly sold off, we've seen the selloffs as an opportunity to load up.And we just got the announcement that the FDA has accepted Dynavax's resubmission post-latest-CRL. The agency has put a PDUFA of August 10, and we think the drug now has a pretty clear run through to approval.And it's not just about the resubmission.At the end of last year, it was taken as a given that in order to get this one to approval, and rooted in the drawn out pathway that the CRLs caused, Dynavax would have to partner up with a bigger name. Of course, if it did, it would likely be giving away North American rights to the drug. This is a $700 million market (estimated at peak). For the company to have carried Heplisav through the early stages of clinical development, then to submit a registration application and respond successfully to two CRLs, and then to have to give he rights away, would be a real sentiment shoot-down.As per the latest release, however, it seems the company has managed to avoid giving away the rights, and (if the drug picks up approval in August) can target the $700 million market itself.There are macro forces that come into play here, as well. Trump just turned his attention to the FDA approval process, and outlined his intentions to streamline it. The Heplisav situation is a perfect example of where cumbersome bureaucracy can get in the way of a drug filling a very large unmet need (which this one will, if and when approved). We don't think the FDA will want to drag this out any further, and risk the drug becoming a poster boy for the agency's incompetency.So what are we saying here? Well, even in the wake of the gains seen on the back of the latest announcement, there's still plenty of run room left in Dynavax. We expect traders to load up ahead of PDUFA, presenting a short term opportunity, and then – of course – the longer term opportunity comes on the back of the agency's final decision.There's binary risk here. If the FDA doesn’t approve the drug, Dynavax is in real trouble. That's the biotech sector all over, however, and we think that in this instance, the binary outcome is weighted towards favorable.We will be updating our subscribers as soon as we know more. For the latest updates on DVAX, sign up below!Disclosure: We have no position in DVAX and have not been compensated for this article.