Dynavax

DYNAVAX
2021 PROXY STATEMENT
& 2020 ANNUAL REPORT

DYNAVAX TECHNOLOGIES CORPORATION
2100 Powell Street, Suite 900
Emeryville, California 94608
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 28, 2021

Dear Stockholder:

You are cordially invited to attend the 2021 Annual Meeting of Stockholders (the ‘‘Annual Meeting’’) of
Dynavax Technologies Corporation, a Delaware corporation (the ‘‘Company’’). The Annual Meeting will be held
virtually on May 28, 2021, at 9:00 a.m. Pacific Time at www.virtualshareholdermeeting.com/DVAX2021. The
Annual Meeting will be held online only and you will not be able to attend the Annual Meeting in person.
You will be able to vote your shares electronically by Internet or by phone and submit questions online during
the Annual Meeting by logging in to the website listed above using the 16-digit control number included in your
Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompanied
our proxy materials. Online check-in will begin at 8:45 a.m. Pacific Time and should allow ample time for the
check-in procedures. The Annual Meeting is being convened for the following purposes:

1.

2.

3.

4.

To elect our three nominees for Class III directors to hold office until the 2024 Annual Meeting of
Stockholders or until their respective successors are duly elected and qualified.

To approve the amendment and restatement of the Dynavax Technologies Corporation 2014 Employee
Stock Purchase Plan to increase the aggregate number of shares of common stock authorized for
issuance under the plan by 1,000,000.

To approve, on an advisory basis, the compensation of the Company’s named executive officers, as
disclosed in the Proxy Statement accompanying this Notice.

To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of
the Company for its fiscal year ending December 31, 2021.

5.

To conduct any other business properly brought before the meeting or any adjournment(s) thereof.

These items of business are more fully described in the accompanying Proxy Statement.

The record date for the Annual Meeting is April 6, 2021 (the ‘‘Record Date’’). Only stockholders of record

at the close of business on that date may vote at the meeting or any adjournment thereof.

Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of
Stockholders to Be Held Virtually at 9:00 a.m., Pacific Time, on May 28, 2021 at
www.virtualshareholdermeeting.com/DVAX2021.

The Proxy Statement and Annual Report to Stockholders for the year ended December 31, 2020 are
available at www.proxyvote.com.
The Board of Directors recommends that you vote FOR the proposals identified above.

By Order of the Board of Directors

Kelly MacDonald
Chief Financial Officer

Emeryville, California
April 16, 2021

Your vote is very important, regardless of the number of shares you own. Whether or not you expect to
attend the virtual Annual Meeting, please complete, date, sign and return the proxy mailed to you, or vote
over the Internet or by phone as instructed in these materials, as promptly as possible in order to ensure
your representation at the Annual Meeting. Even if you have voted by proxy card or over the Internet or
by phone, you may still vote electronically during the Annual Meeting.

DYNAVAX TECHNOLOGIES CORPORATION
2100 Powell Street, Suite 900
Emeryville, California 94608

PROXY STATEMENT
FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 28, 2021

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why did I receive a notice regarding the availability of proxy materials on the Internet?

We have sent you the proxy notice because the Board of Directors (the ‘‘Board’’) of Dynavax Technologies

Corporation (the ‘‘Company,’’ ‘‘Dynavax,’’ ‘‘we’’ or ‘‘us’’) is soliciting your proxy to vote at the 2021 Annual
Meeting of Stockholders (the ‘‘Annual Meeting’’).

In accordance with the rules adopted by the Securities and Exchange Commission (the ‘‘SEC’’), instead of

mailing a printed copy of our proxy materials, including our annual report, we have decided to provide access to
these materials via the Internet. Accordingly, on or about April 16, 2021, we will begin mailing a Notice
Regarding Internet Availability of Proxy Materials (the ‘‘Notice’’), to stockholders of record as of April 6, 2021
(the ‘‘Record Date’’), and will have posted our proxy materials on the website referenced in the Notice
(www.proxyvote.com). As more fully described in the Notice, all stockholders may choose to access our proxy
materials on that website, and any stockholder may request a printed set of such materials as follows:

•

•

•

by telephone: call 1-800-579-1639 free of charge and follow the instructions;

by Internet: go to www.proxyvote.com and follow the instructions; or

by e-mail: send an e-mail message to sendmaterial@proxyvote.com. Please send a blank e-mail and
insert the 16-Digit Control Number located in your Notice in the subject line.

Please note that you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote
before the Annual Meeting by Internet, by phone or by proxy using a proxy card that you may request or that we
may elect to deliver at a later time.

Will I receive any proxy materials by mail other than the Notice?

No, you will not receive any other proxy materials by mail unless you request a paper copy of the proxy

materials.

How do I attend the Annual Meeting?

The Annual Meeting will be held virtually on May 28, 2021 at 9:00 a.m. Pacific Time at

www.virtualshareholdermeeting.com/DVAX2021. The Annual Meeting will be held online only. During the
meeting, you will be able to vote your shares electronically by Internet and submit questions online by logging in
to the website listed above using the 16-digit control number included in the Notice, or you may vote before the
meeting by using a proxy card that you may request or that we may elect to deliver at a later time. You may also
vote by phone before the meeting by calling 1-800-690-6903. Online check-in for the Annual Meeting will begin
at 8:45 a.m. Pacific Time and you should allow ample time for the check-in procedures. You may submit
questions during the meeting by visiting www.virtualshareholdermeeting.com/DVAX2021. We will respond to as
many appropriate inquiries at the Annual Meeting as time allows.

You may vote your shares electronically before the meeting by Internet, by phone or by proxy using a proxy

card that you may request or that we may elect to deliver at a later time, and you do not need to access the
virtual Annual Meeting to vote if you submitted your vote via Internet, phone or proxy card in advance of the
Annual Meeting.

Who can vote at the Annual Meeting?

Only stockholders of record at the close of business on the Record Date will be entitled to vote at the
Annual Meeting. On the Record Date, there were 114,563,212 shares of common stock outstanding and entitled
to vote. A list of our stockholders of record will be open for examination by any stockholder beginning ten days

1

prior to the Annual Meeting at our headquarters located at 2100 Powell Street, Suite 900, Emeryville,
California 94608. If you would like to view the list, please contact our Corporate Secretary to schedule an
appointment by calling (510) 848-5100 or writing to him at the address above. In addition, the list will be
available for inspection by stockholders on the virtual meeting website during the Annual Meeting.

Stockholder of Record: Shares Registered in Your Name

If on the Record Date, your shares were registered directly in your name with our transfer agent,
Computershare, then you are a stockholder of record. As a stockholder of record, you may vote by Internet
before or during the Annual Meeting, or before the Annual Meeting by using a proxy card that you may request
or that we may elect to deliver at a later time. You may also vote by phone before the meeting by calling
1-800-690-6903. Whether or not you plan to attend, we urge you to fill out and return the proxy card or vote by
Internet or by phone before the Annual Meeting to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on the Record Date, your shares were held, not in your name, but rather in an account at a brokerage

firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in ‘‘street
name’’ and the Notice is being forwarded to you by that organization. Simply follow the voting instructions in
such notice to ensure that your vote is counted. The organization holding your account is considered to be the
stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to
direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend
the Annual Meeting. To vote live at the Annual Meeting, follow the instructions after logging into the meeting
website.

What am I voting on?

We are asking you to vote on four proposals:

1.

2.

3.

4.

To elect our three nominees for Class III directors to hold office until the 2024 Annual Meeting of
Stockholders or until their respective successors are duly elected and qualified.

To approve the amendment and restatement of the Dynavax Technologies Corporation 2014 Employee
Stock Purchase Plan to increase the aggregate number of shares of common stock authorized for
issuance under the plan by 1,000,000.

To approve, on an advisory basis, the compensation of the Company’s named executive officers, as
disclosed in the Proxy Statement accompanying this Notice.

To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of
the Company for its fiscal year ending December 31, 2021.

What is the Board’s recommendation?

The Board recommends that you vote ‘‘For’’ each of the four proposals.

What if another matter is properly brought before the Annual Meeting?

The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any

other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote on those matters in accordance with her or his best judgment.

How do I vote?

You may either vote ‘‘For’’ all the nominees to the Board or you may ‘‘Withhold’’ your vote for any
nominee you specify. For each of the other matters to be voted on, you may vote ‘‘For’’ or ‘‘Against’’ or abstain
from voting. The procedures for voting are fairly simple:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote by Internet before or during the Annual Meeting, by phone

before the Annual Meeting or by proxy before the Annual Meeting using a proxy card that you may request or
that we may elect to deliver at a later time. Whether or not you plan to attend the Annual Meeting, we urge you
to vote to ensure your vote is counted.

•

To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered and
return it promptly in the envelope provided. If you return your signed proxy card to us before the
Annual Meeting, we will vote your shares as you direct.

2

•

•

•

To vote by phone, call 1-800-690-6903 free of charge and follow the recorded instructions. You will be
asked to provide the control number from the Notice. Your telephone vote must be received by
11:59 p.m., Eastern Time on May 27, 2021 to be counted.

To vote through the Internet before the meeting, go to www.proxyvote.com and follow the on-screen
instructions to complete an electronic proxy card. You will be asked to provide the control number
from the Notice. Your Internet vote must be received by 11:59 p.m., Eastern Time on May 27, 2021 to
be counted.

To vote through the Internet during the meeting, please visit
www.virtualshareholdermeeting.com/DVAX2021 and have available the 16-digit control number
included in your Notice.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker or other agent, you should

have received a notice containing voting instructions from that organization rather than from Dynavax. Simply
follow the voting instructions in such notice to ensure that your vote is counted. To vote live at the Annual
Meeting, follow the instructions after logging into the meeting website.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of common stock you own as of the

Record Date.

What happens if I do not vote?

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record and do not vote before the Annual Meeting by phone or by using a proxy
card that you may request or that we may elect to deliver at a later time, or through the Internet before or at the
Annual Meeting, your shares will not be voted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares,

the question of whether your broker or nominee will still be able to vote your shares depends on whether the
applicable stock exchange deems the particular proposal to be a ‘‘routine’’ matter. Brokers and nominees can use
their discretion to vote ‘‘uninstructed’’ shares with respect to matters that are considered to be ‘‘routine,’’ but not
with respect to ‘‘non-routine’’ matters. Under the rules and interpretations of the New York Stock Exchange,
‘‘non-routine’’ matters are matters that may substantially affect the rights or privileges of stockholders, such as
mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including
any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on
executive compensation), and certain corporate governance proposals, even if management-supported.
Accordingly, your broker or nominee may not vote your shares on Proposals 1, 2 or 3 without your instructions,
but may vote your shares on Proposal 4.

What if I return a proxy card but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote without marking any voting selections, your

shares will be voted:

•

•

•

•

Proposal 1: ‘‘For’’ election of our three nominees as Class III directors;

Proposal 2: ‘‘For’’ approval of the amendment and restatement of the Dynavax Technologies
Corporation 2014 Employee Stock Purchase Plan to increase the aggregate number of shares of
common stock authorized for issuance under the plan by 1,000,000;

Proposal 3: ‘‘For’’ advisory approval of executive compensation; and

Proposal 4: ‘‘For’’ ratification of the selection of Ernst & Young LLP as the independent registered
public accounting firm of the Company for its fiscal year ending December 31, 2021.

3

If any other matter is properly presented at the Annual Meeting, your proxyholder (one of the individuals

named on your proxy card) will vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and
employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and
employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage
firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one Notice?

If you receive more than one Notice, your shares may be registered in more than one name or are registered

in different accounts. Please follow the voting instructions on each of the Notices to ensure that all of your
shares are voted.

Can I change my vote after submitting my proxy?

Stockholder of Record: Shares Registered in Your Name

Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record

holder of your shares, you may revoke your proxy in any one of the following ways:

•

•

•

•

•

You may submit another properly completed proxy card with a later date.

You may submit a later-dated vote by telephone by calling 1-800-690-6903. You will need the 16-digit
control number included on your Notice or your proxy card (if you received a printed copy of the
proxy materials). Votes submitted by telephone must be received by 11:59 p.m., Eastern Time on
May 27, 2021 to be counted.

You may grant a subsequent proxy through the Internet. You will need the 16-digit control number
included on your Notice or your proxy card (if you received a printed copy of the proxy materials).

You may send a timely written notice that you are revoking your proxy to Dynavax Technologies
Corporation, Attention: Corporate Secretary, 2100 Powell Street, Suite 900, Emeryville,
California 94608.

You may virtually attend the Annual Meeting and vote by Internet by visiting
www.virtualshareholdermeeting.com/DVAX2021. To attend the Annual Meeting, you will need the
16-digit control number included in your Notice, on your proxy card or on the instructions that
accompanied your proxy materials. Simply attending the meeting will not, by itself, revoke your proxy.

Your most current proxy card or telephone vote or Internet proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Broker or Agent

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions

provided by your broker or bank.

When are stockholder proposals due for next year’s annual meeting?

To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by

December 17, 2021 to Dynavax Technologies Corporation, Attention: Corporate Secretary, 2100 Powell Street,
Suite 900, Emeryville, California 94608. However, if our 2022 Annual Meeting of Stockholders is not held
between April 28, 2022, and June 27, 2022, then the deadline will be a reasonable time before we begin to print
and send our proxy materials. If you wish to submit a proposal (including a director nomination) that is not to be
included in next year’s proxy materials, you must do so no later than the close of business on February 27, 2022,
and no earlier than the close of business on January 28, 2022. However, if our 2022 Annual Meeting of
Stockholders is not held between April 28, 2022, and June 27, 2022, then you must submit your proposal (or
director nomination) not earlier than the close of business on the 120th day prior to such annual meeting and not
later than the close of business on the 90th day prior to such annual meeting or the 10th day following the day on
which public announcement of the date of such meeting is first made.

4

How many votes are needed to approve each proposal?

•

•

•

•

Proposal 1: to elect our three nominees for Class III directors, the three nominees receiving the most
‘‘For’’ votes from the holders of shares present (either in person or represented by proxy) and cast for
the election of directors will be elected. Only votes ‘‘For’’ will affect the outcome of the vote;
‘‘Withhold’’ votes will have no effect on the outcome of the vote. However, if a nominee receives a
greater number of ‘‘Withhold’’ votes than ‘‘For’’ votes, such nominee will submit his or her offer of
resignation for consideration by our Nominating and Corporate Governance Committee in accordance
with our Majority Vote Policy discussed in more detail in the section entitled ‘‘Corporate Governance –
Majority Vote Policy’’ in this proxy statement.

Proposal 2: to approve an amendment and restatement of the 2014 ESPP to increase the aggregate
number of shares of common stock authorized for issuance under the 2014 ESPP by 1,000,000, such
amendment and restatement must receive ‘‘For’’ votes from the holders of a majority of shares present
(either in person or by proxy) and entitled to vote on the matter at the meeting. If you return your
proxy and select ‘‘Abstain,’’ it will have the same effect as an ‘‘Against’’ vote. Broker non-votes will
have no effect.

Proposal 3: to approve, on an advisory basis, the 2020 compensation of the Company’s named
executive officers, such advisory approval must receive ‘‘For’’ votes from the holders of a majority of
shares present (either in person or by proxy) and entitled to vote on the matter at the meeting. If you
return your proxy and select ‘‘Abstain’’ from voting, it will have the same effect as an ‘‘Against’’ vote.
Broker non-votes will have no effect.

Proposal 4: to ratify the selection of Ernst & Young LLP as the Company’s independent registered
public accounting firm for our fiscal year ending December 31, 2021, such ratification must receive
‘‘For’’ votes from the holders of a majority of shares present (either in person or by proxy) and entitled
to vote on the matter at the meeting. If you return your proxy and select ‘‘Abstain’’ from voting, it will
have the same effect as an ‘‘Against’’ vote. Broker non-votes will have no effect. However, as
Proposal 4 is considered a ‘‘routine’’ matter, we do not expect to receive any broker non-votes.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid Annual Meeting. A quorum will be present if

stockholders holding at least a majority of the outstanding shares entitled to vote are present at the Annual
Meeting in person or represented by proxy. On the record date, there were 114,563,212 shares outstanding and
entitled to vote.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on
your behalf by your broker, bank or other nominee) or if you vote at the Annual Meeting. Abstentions and broker
non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of
shares present at the Annual Meeting in person or represented by proxy may adjourn the Annual Meeting to
another date.

How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published
in a current report on Form 8-K within four business days following the voting. If we are unable to obtain final
results in that time, we will announce the preliminary results and subsequently file a second current report on
Form 8-K with the final results.

What proxy materials are available on the Internet?

The 2021 proxy statement and 2020 Annual Report on Form 10-K are available at

http://investors.dynavax.com/annuals-proxies.cfm.

5

PROPOSAL 1

ELECTION OF DIRECTORS

Our Board is divided into three classes, and each class has a three-year term. Vacancies on the Board may
be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill
a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the
remainder of the full term of that class and until the director’s successor is elected and qualified.

Our Board presently has nine members. There are three Class III directors whose term of office expires in

2021: Francis R. Cano, Ph.D., Peter Paradiso, Ph.D. and Peggy V. Phillips, each of whom is a nominee for
director and currently a director of the Company. Dr. Cano and Ms. Phillips were previously elected by the
stockholders in 2018. Dr. Paradiso was nominated by our nominating and corporate governance committee and
appointed to our Board in 2020 and this will be his first time standing for election. If each nominee is elected at
the Annual Meeting, each of these nominees will serve until the 2024 Annual Meeting and until his or her
successor is elected and has qualified, or, if sooner, until the director’s death, resignation or removal. We have a
policy encouraging our directors’ attendance at our annual meetings. There were seven out of seven directors in
attendance at our 2020 Annual Meeting.

Vote Required

Directors are elected by a plurality of the votes of the holders of shares present in person or represented by

proxy and entitled to vote on the election of directors. The three nominees receiving the highest number of
affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is
not withheld, for the election of the nominees named below. Although the election of directors at the Annual
Meeting is uncontested and directors are elected by a plurality of votes cast, and we therefore anticipate that each
of the named nominees for director will be elected at the Annual Meeting, under our Corporate Governance
Guidelines, any nominee for director is required to submit an offer of resignation for consideration by the
Nominating and Corporate Governance Committee if such nominee for director (in an uncontested election)
receives a greater number of ‘‘Withhold’’ votes than ‘‘For’’ votes. In such case, the Nominating and Corporate
Governance Committee will then consider all the relevant facts and circumstances and recommend to the
Board the action to be taken with respect to such offer of resignation. For more information on this policy see
the section entitled ‘‘Corporate Governance – Majority Vote Policy.’’ If any nominee becomes unavailable for
election as a result of an unexpected occurrence, your shares will be voted for the election of a substitute
nominee proposed by our Board. Each person nominated for election has agreed to serve if elected. Our
Board has no reason to believe that any nominee will be unable to serve.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.

Set forth below is certain biographical information as of April 6, 2021, for the nominees and each person

whose term as a director will continue after the Annual Meeting.

Name
Francis R. Cano, Ph.D.
Julie Eastland
Andrew Hack, M.D., Ph.D.
Daniel L. Kisner, M.D.
Brent MacGregor
Peter R. Paradiso, Ph.D.
Peggy V. Phillips
Natale Ricciardi
Ryan Spencer

Position

Director
Director
Director
Director
Director
Director
Director
Director
Director and Chief Executive Officer

Age
76
56
47
74
57
70
67
72
43

6

CLASS III DIRECTOR NOMINEES

Francis R. Cano, Ph.D.

Dr. Cano was appointed to our Board in November 2009. Dr. Cano has been President and Founder of

Cano Biotech Corp., a consulting firm focusing on the vaccine business, since 1996 and also serves on the board of
Biomerica, Inc., a developer and manufacturer of diagnostic products. Previously, Dr. Cano served on the board of
Arbor Vita Corporation, a biopharmaceutical company. From 1993 to 1996, Dr. Cano was President and Chief
Operating Officer for Aviron, a biopharmaceutical company, which was later acquired by MedImmune in 2001. As a
Co-Founder of Aviron, he completed two rounds of venture financing, a licensing agreement with SmithKline
Biologicals and in-licensed Flu-Mist influenza vaccine from the National Institutes of Health. For 21 years, Dr. Cano
worked with the Lederle Laboratories Division of American Cyanamid, including as its Vice President and General
Manager of the Biologicals unit. He earned a Ph.D. in Microbiology from Pennsylvania State University, served as a
Research Associate at Rutgers Institute of Microbiology, and holds a M.S. in Microbiology and a B.S. in Biology from
St. John’s University. The Board believes that Dr. Cano’s experience as a founder of and advisor to established vaccine
businesses provides significant insights for the strategy of the Company with respect to key technical and operational
issues in vaccine development and qualifies him to be nominated as a director.

Peter Paradiso, Ph.D.

Dr. Peter R. Paradiso was appointed to our Board in September 2020. Dr. Paradiso retired as Vice President of

New Business and Scientific Affairs for Pfizer Vaccines, a Division of Pfizer Inc., where he worked from 2003 to
2012. In this position, Dr. Paradiso was responsible for global scientific affairs and strategic planning within the
vaccine research and development group and for commercial oversight of products in development. From 2012 to
present, Dr. Paradiso has been working as a consultant in the vaccine field. He has worked in vaccine development for
over 30 years. He has published extensively in the field of pediatric vaccines, especially in the areas of
glycoconjugates, combination vaccines and respiratory viral vaccines. Dr. Paradiso worked on the development of
pneumococcal conjugate vaccines for more than 20 years, including Prevenar and Prevenar 13 for which he holds
patents worldwide. He worked towards achieving licensure and incorporation of Prevenar 13 into childhood National
Immunization Programs on a global level and ultimately the licensure and introduction of Prevenar 13 for adults. He
has also been involved in the development and global registration of vaccines for Haemophilus influenzae type b,
acellular pertussis, rotavirus, Neisseria meningitidis group C, and influenza. Dr. Paradiso currently serves as a member
of CEPI’s R&D and Manufacturing Investment Committee (RDMIC), which has been established to make investment
decisions for vaccine R&D and manufacturing under the COVAX pillar of the ACT-Accelerator. In addition, he is
Chairman of a Procurement Reference Group (PRG) to advise UNICEF and GAVI on the procurement of rotavirus
vaccines. Dr. Paradiso previously served as a member HHS’s National Vaccine Advisory Committee, the Advisory
Council on Immunization for New York State and as liaison member of the CDC’s Advisory Committee on
Immunization Practices. Dr Paradiso served as an advisor to the WHO’s Strategic Advisory Group of Experts on
vaccines and the Global Alliance for Vaccines and Immunization’s (GAVI) Task Force on Research and Development.
Dr. Paradiso was named as a Top 50 Vaccine Influencer by Vaccine Nation in 2013, received the University of
Vermont Medical College’s Distinguished Graduate Alumni Award for 2014 and was honored as a Vaccine Hero by
the Bill and Melinda Gates Foundation in their Art of Saving a Life campaign. Dr. Paradiso received a doctor of
philosophy (Ph.D.) degree in biochemistry from the University of Vermont College of Medicine and a BS in
Chemistry from St. Lawrence University. The Board believes that Dr. Paradiso’s extensive experience in vaccine
development can provide significant insights for the strategy of the Company with respect to key technical and
operational issues in vaccine development and qualifies him to be nominated as a director.

Peggy V. Phillips

Ms. Phillips has been a member of our Board since August 2006. Ms. Phillips served on the board of directors of
several biopharmaceutical companies: PhaseRx, Inc. from 2016 to 2018, Tekmira Pharmaceuticals from 2014 to 2015,
Portola Pharmaceuticals from 2006 to 2013, as well as the Naval Academy Foundation from 2003 to 2011. From 1996
until 2002, she served on the board of directors of Immunex Corporation, a biotechnology company, and, from 1999,
she served as its Chief Operating Officer until the company was acquired by Amgen in 2002. During her career at
Immunex, she held positions of increasing responsibility in research, development, manufacturing, sales and marketing.
As Senior Vice President for Pharmaceutical Development and General Manager for Enbrel ® from 1994 until 1998,
she was responsible for clinical development and regulatory affairs as well as the launch, sales and marketing of the
product. Prior to joining Immunex, Ms. Phillips worked at Miles Laboratories. Ms. Phillips holds a B.S. and a M.S. in

7

microbiology from the University of Idaho. The Board believes that Ms. Phillips provides significant experience in
development and commercialization of biotechnology products. Her background and experience with larger, complex
organizations provides significant operational and strategic insights in assessing the strategy of the Company and
qualifies her to be nominated as a director.

CLASS I DIRECTOR CONTINUING IN OFFICE UNTIL THE 2022 ANNUAL MEETING

Andrew Hack, M.D., Ph.D.

Dr. Hack has served as a member of our Board since August 2019 and currently serves as Interim
Chairperson of the Board. Dr. Hack serves as a Managing Director of Bain Capital Life Sciences, L.P. Before
joining Bain Capital, Dr. Hack was the Chief Financial Officer of Editas Medicine, Inc., a gene editing company,
from July 2015 to March 2019. Prior to joining Editas, from May 2011 to June 2015, Dr. Hack was a portfolio
manager at Millennium Management LLC, an institutional asset manager, or Millennium, where he ran a
healthcare fund focused on biotechnology, pharmaceutical, and medical device companies. Before joining
Millennium, Dr. Hack was a healthcare analyst at HealthCor Management, L.P., a registered investment advisor,
or HealthCor, from December 2008 to May 2011. Prior to HealthCor, Dr. Hack served as a healthcare analyst for
hedge fund Carlyle-Blue Wave Partners and as principal of the MPM BioEquities Fund, a hedge fund that was
affiliated with MPM Capital. Dr. Hack began his investment career covering the biotechnology sector at
investment banks Banc of America Securities LLC and Rodman & Renshaw, LLC. Previously, Dr. Hack was
Director of Life Sciences and co-founder of Reify Corporation, a life science tools and drug discovery company.
Dr. Hack serves as a director of Allena Pharmaceutical, Inc., a biopharmaceutical company, Atea
Pharmaceuticals, Inc., a clinical stage biopharmaceutical company and Mersana Therapeutics, Inc., a clinical
stage biopharmaceutical company. Dr. Hack received his B.A. in biology with special honors from the University
of Chicago, where he also received his M.D. and Ph.D. We believe Dr. Hack’s financial background and
extensive and diverse experience in the life sciences industry qualify him to serve on our Board.

Julie Eastland

Ms. Eastland was appointed to our Board in July 2020. Ms. Eastland has served as Chief Operating Officer

and Chief Financial Officer of ReCode Therapeutics since October 2020, a private-held genetics medicine
company focused on delivery of novel, anti-viral lipid nanoparticles therapeutics for respiratory diseases. Prior to
ReCode, from August 2018 to January 2020, Ms. Eastland served as Chief Financial Officer and Chief Business
Officer of Rainier Therapeutics, a private biopharmaceutical company focused on FGFR3 bladder cancer. Prior to
Rainier she served as Chief Financial Officer and Chief Business Officer of Cascadian Therapeutics, Inc., a
publicly traded biotechnology company, from September 2010 through its acquisition by Seattle Genetics in
March 2018. Prior to Cascadian, Ms. Eastland served as Chief Financial Officer and Vice President of Finance
and Operations of VLST Corporation, a privately-held biotechnology company, from January 2006 to September
2010 and held various financial and strategic management positions at publicly traded biotechnology companies
including Dendreon and Amgen. Ms. Eastland received an M.B.A. from Edinburgh University Management
School and a B.S. in finance from Colorado State University. She also serves on the boards of Harpoon
Therapeutics and Graybug Vision. We believe that Ms. Eastland’s experience as a financial executive in the
biopharmaceutical industry qualifies her to serve as a director.

Brent MacGregor

Mr. MacGregor was appointed to our Board in July 2020. Mr. MacGregor is currently CEO of Medical
Developments International Ltd., as Australian-based company with marketed products in pain management and
respiratory ailments. Mr. MacGregor previously served as Senior Vice-President, Global Commercial Operations
at Seqirus, a CSL Limited company. At Seqirus, Mr. MacGregor led a global team of 280 people in sales,
marketing, commercial development, public policy and business development for a portfolio of seasonal
influenza vaccines, an intra venous anti-viral product, a suite of in-licensed vaccines and pharmaceutical
products, and a pandemic and pre-pandemic business. Prior to Seqirus, Mr. MacGregor was President and
Global Head of Novartis Influenza Vaccines, where he led integrated global operations of its influenza portfolio,
through its acquisition by CSL Ltd. Mr. MacGregor held several roles while at Sanofi Pasteur where he spent
17 years with his final role as President, Sanofi Pasteur KK, Tokyo, Japan. Mr. MacGregor received an
M.B.A. from Northwestern University, Kellogg School of Management, a Master of Arts from University of
Reading, Reading, England and a Bachelor of Arts from Carleton University, Ottawa, Canada. We believe that
Mr. MacGregor’s experience as a vaccine executive qualifies him to serve as a director.

8

CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL THE 2023 ANNUAL MEETING

Daniel L. Kisner, M.D.

Dr. Kisner has been a member of our Board since July 2010. From 2003 to 2010, Dr. Kisner served as a

partner at Aberdare Ventures and prior to that as President and CEO of Caliper Technologies, leading its
evolution from a start-up focused on microfluidic lab-on-chip technology to a publicly traded, commercial
organization. Prior to Caliper, he was the President and Chief Operating Officer of Isis Pharmaceuticals, Inc., a
biomedical pharmaceutical company. Previously, Dr. Kisner was Division Vice President of Pharmaceutical
Development for Abbott Laboratories and Vice President of Clinical Research and Development at SmithKline
Beckman Pharmaceuticals. In addition, he held a tenured position in the Division of Oncology at the University
of Texas, San Antonio School of Medicine and is certified by the American Board of Internal Medicine in
Internal Medicine and Medical Oncology. Additionally, he is currently serving on the boards of Oncternal
Therapeutics, a biotechnology company, Histogen, Inc., a therapeutics company, and Zynerba Pharmaceuticals, a
biotechnology company. Dr. Kisner previously served as Chairman of the board for Tekmira Pharmaceuticals, a
biopharmaceutical company, until March 2015, and as a director of Lpath, Inc., a pharmaceutical company.
He holds a B.A. from Rutgers University and an M.D. from Georgetown University. Our Board believes that
Dr. Kisner’s background with larger, complex technology-based organizations as well as his significant
experience with corporate transactions, including investing in venture-backed life science companies provides the
Board with insights for setting strategy of the Company and qualifies him to serve as a director.

Natale Ricciardi

Mr. Ricciardi has been a member of our Board since June 2013. Mr. Ricciardi spent his entire 39-year

career at Pfizer Inc., a biopharmaceutical company, retiring in 2011 as a member of the Pfizer Executive
Leadership Team. While holding the positions of President, Pfizer Global Manufacturing, and Senior Vice
President of Pfizer Inc. from 2004 until 2011, Mr. Ricciardi was directly responsible for all of Pfizer’s internal
and external supply organization, a global enterprise that grew to more than 100 manufacturing facilities
supplying small and large molecule pharmaceuticals, vaccines, consumer, nutrition and animal health products.
Mr. Ricciardi maintained responsibility for global manufacturing activities from 2004 through 2011. Previously,
from 1999 to 2004, he had oversight for Pfizer’s U.S. manufacturing operations and from 1995 to 1999 was
Vice President of Manufacturing for Pfizer’s Animal Health Group. Mr. Ricciardi serves on the board of directors
of Prestige Consumer Healthcare, Inc., a public company that sells, manufactures and distributes consumer
healthcare products. He also serves on the board of directors of Rapid MicroBiosystems, Inc., a private company
that provides automated, growth-based, rapid microbial detection technology. He is currently on the Strategic
Advisory Board of HealthCare Royalty Partners. Mr. Ricciardi served on the boards of the National Association
of Manufacturers and Mediacom Communications Corporation until its privatization in 2011. Mr. Ricciardi
earned a degree in Chemical Engineering from The City College of New York and an MBA in Finance and
International Business from Fordham University. Our Board believes Mr. Ricciardi’s 39-year career at Pfizer Inc.,
a leading pharmaceutical company, including as a member of the Pfizer Executive Leadership Team and direct
responsibility for all of Pfizer’s internal supply organization, including global manufacturing, provides the Board
with insights for reviewing the operations of the Company and qualifies him to serve as a director.

Ryan Spencer

Mr. Spencer has been a member of our Board since December 2019. Mr. Spencer joined Dynavax in
2006 and has served as our Chief Executive Officer since December 2019, and as interim co-President between
May and December 2019. At the time of his appointment as interim co-President in May 2019, Mr. Spencer
served as Senior Vice President, Commercial where he was instrumental in leading the launch and
commercialization of HEPLISAV-B. Throughout his time at Dynavax since November 2006, Mr. Spencer has
held a variety of positions with increasing responsibility, building from a foundation in corporate finance to
business strategy and investor relations, including Senior Director Strategic Planning until his promotion in
September 2016 to Senior Product Director, followed by promotions in February 2017 to Vice President
Corporate Strategy & Commercialization and in May 2019 to Senior Vice President, Commercial. Prior to joining
Dynavax, Mr. Spencer was the Assistant Controller at QRS Corporation, a publicly-held technology company,
and was a member of the audit practice at Ernst & Young. Mr. Spencer earned a B.A. in Business Economics
from University of California, Santa Barbara. Our Board believes that Mr. Spencer’s prior experience, including
his financial and commercialization experience, his tenure at Dynavax and his role as a Chief Executive Officer
qualifies him to serve as a director.

9

PROPOSAL 2

APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE 2014 EMPLOYEE STOCK
PURCHASE PLAN

The Board is requesting stockholder approval of an amendment and restatement of the Dynavax

Technologies Corporation 2014 Employee Stock Purchase Plan (the ‘‘2014 ESPP’’). We refer to such amendment
and restatement of the 2014 ESPP in this proxy statement as the ‘‘Amended 2014 ESPP’’.

The Amended 2014 ESPP contains the following material change from the 2014 ESPP:

•

Subject to adjustment for certain changes in our capitalization, the maximum number of shares of our
common stock that may be issued under the Amended 2014 ESPP will be 1,850,000 shares, which is
an increase of 1,000,000 shares over the current maximum number of shares of our common stock that
may be issued under the 2014 ESPP.

Approval of the Amended 2014 ESPP will allow us to continue to provide our employees with the
opportunity to acquire an ownership interest in the Company through their participation in the Amended
2014 ESPP, thereby encouraging them to remain in our service and more closely aligning their interests with
those of our stockholders.

If this Proposal 2 is approved by our stockholders, an additional 1,000,000 shares of our common stock will

be available for issuance under the Amended 2014 ESPP. As of April 6, 2021, a total of 151,667 shares of our
common stock remained available for issuance under the 2014 ESPP. We do not maintain any other employee
stock purchase plans. As of April 6, 2021, a total of 114,563,212 shares of our common stock were outstanding.

A summary of the principal features of the Amended 2014 ESPP follows below. The summary is qualified

by the full text of the Amended 2014 ESPP that is attached as Appendix A to this proxy statement.

Summary of the Amended 2014 ESPP

Purpose

The purpose of the Amended 2014 ESPP is to provide a means by which our employees may be given an
opportunity to purchase shares of our common stock, to assist us in retaining the services of our employees, to
secure and retain the services of new employees and to provide incentives for such persons to exert maximum
efforts for our success. The rights to purchase common stock granted under the Amended 2014 ESPP are
intended to qualify as options issued under an ‘‘employee stock purchase plan’’ as that term is defined in
Section 423(b) of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’).

Administration

The Board has the power to administer the Amended 2014 ESPP and may also delegate administration of

the Amended 2014 ESPP to a committee comprised of one or more members of the Board. The Board has
delegated administration of the Amended 2014 ESPP to the Compensation Committee, but may, at any time,
revest in itself some or all of the powers previously delegated to the Compensation Committee. Each of the
Board and the Compensation Committee is considered to be a Plan Administrator for purposes of this Proposal 2.
The Plan Administrator has the power to construe and interpret both the Amended 2014 ESPP and the rights
granted under it. The Plan Administrator has the power, subject to the provisions of the Amended 2014 ESPP, to
determine when and how rights to purchase our common stock will be granted, the provisions of each offering of
such rights (which need not be identical), and whether employees of any of our parent or subsidiary companies
will be eligible to participate in the Amended 2014 ESPP.

Stock Subject to Amended 2014 ESPP

Subject to adjustment for certain changes in our capitalization, the maximum number of shares of our
common stock that may be issued under the Amended 2014 ESPP is 1,850,000 shares, which is equal to the sum
of (i) 50,000 shares that were approved at our 2014 annual meeting of stockholders, (ii) an additional
200,000 shares that were approved at our 2016 annual meeting of stockholders, (iii) an additional 600,000 shares
that were approved at our 2018 annual meeting of stockholders and (iv) an additional 1,000,000 shares that are
subject to approval by our stockholders under this Proposal 2 . If any rights granted under the Amended

10

2014 ESPP terminate without being exercised in full, the shares of common stock not purchased under such
rights again become available for issuance under the Amended 2014 ESPP. The shares of common stock
purchasable under the Amended 2014 ESPP will be shares of authorized but unissued or reacquired common
stock, including shares repurchased by us on the open market.

Offerings

The Amended 2014 ESPP will be implemented by offerings of rights to purchase our common stock to all
eligible employees. The Plan Administrator will determine the duration of each offering period, provided that in
no event may an offering period exceed 27 months. The Plan Administrator may establish separate offerings
which vary in terms (although not inconsistent with the provisions of the Amended 2014 ESPP or the
requirements of applicable laws). Each offering period will have one or more purchase dates, as determined by
the Plan Administrator prior to the commencement of the offering period. The Plan Administrator has the
authority to alter the terms of an offering prior to the commencement of the offering period, including the
duration of subsequent offering periods. When an eligible employee elects to join an offering period, he or she is
granted a right to purchase shares of our common stock on each purchase date within the offering period. On the
purchase date, all contributions collected from the participant are automatically applied to the purchase of our
common stock, subject to certain limitations (which are described further below under ‘‘Eligibility’’).

The Plan Administrator has the discretion to structure an offering so that if the fair market value of our
common stock on the first trading day of a new purchase period within the offering period is less than or equal
to the fair market value of our common stock on the first day of the offering period, then that offering will
terminate immediately as of that first trading day, and the participants in such terminated offering will be
automatically enrolled in a new offering beginning on the first trading day of such new purchase period.

Eligibility

Any individual who is employed by us (or by any of our parent or subsidiary companies if such company is

designated by the Plan Administrator as eligible to participate in the Amended 2014 ESPP) may participate in
offerings under the Amended 2014 ESPP, provided such individual has been employed by us (or our parent or
subsidiary, if applicable) for such continuous period preceding the first day of the offering period as the Plan
Administrator may require, but in no event may the required period of continuous employment be equal to or
greater than two years. In addition, the Plan Administrator may provide that an employee will not be eligible to
be granted purchase rights under the Amended 2014 ESPP unless such employee is customarily employed for
more than 20 hours per week and more than five months per calendar year. The Plan Administrator may also
provide in any offering that certain of our employees who are ‘‘highly compensated’’ as defined in the Code are
not eligible to participate in the Amended 2014 ESPP.

No employee will be eligible to participate in the Amended 2014 ESPP if, immediately after the grant of

purchase rights, the employee would own, directly or indirectly, stock possessing 5% or more of the total
combined voting power or value of all classes of our stock or of any of our parent or subsidiary companies,
including any stock which such employee may purchase under all outstanding purchase rights and options.
In addition, no employee may purchase more than $25,000 worth of our common stock (determined based on the
fair market value of the shares at the time such rights are granted) under all our employee stock purchase plans
and any employee stock purchase plans of our parent or subsidiary companies for each calendar year during
which such rights are outstanding.

As of April 6, 2021, we had approximately 252 employees.

Participation in the Amended 2014 ESPP

An eligible employee may enroll in the Amended 2014 ESPP by delivering to us, within the time specified
in the offering, an enrollment form authorizing contributions as specified by the Plan Administrator, which may
be up to 10% of such employee’s earnings during the offering period. Each participant will be granted a separate
purchase right for each offering in which he or she participates. Unless an employee’s participation is
discontinued, his or her purchase right will be exercised automatically at the end of each purchase period at the
applicable purchase price.

11

Purchase Price

The purchase price per share at which shares of our common stock are acquired pursuant to purchase rights

on each purchase date during an offering period will not be less than the lower of (i) 85% of the fair market
value of a share of our common stock on the first day of the offering period or (ii) 85% of the fair market value
of a share of our common stock on the applicable purchase date.

As of April 6, 2021, the closing price of our common stock as reported on the Nasdaq Capital Market was

$10.12 per share.

Payment of Purchase Price; Payroll Deductions

The purchase of shares during an offering period generally will be funded by a participant’s payroll
deductions accumulated during the offering period. A participant may change his or her rate of contributions, if
and as permitted in the offering. All contributions made for a participant are credited to his or her account under
the Amended 2014 ESPP and deposited with our general funds.

Purchase Limits

In connection with each offering made under the Amended 2014 ESPP, the Plan Administrator may specify

(i) a maximum number of shares of our common stock that may be purchased by any participant pursuant to
such offering, (ii) a maximum number of shares of our common stock that may be purchased by any participant
on any purchase date pursuant to such offering, (iii) a maximum aggregate number of shares of our common
stock that may be purchased by all participants pursuant to such offering, and/or (iv) a maximum aggregate
number of shares of our common stock that may be purchased by all participants on any purchase date pursuant
to such offering. If the aggregate purchase of shares of our common stock issuable upon exercise of purchase
rights granted under such offering would exceed any such maximum aggregate number, then, in the absence of
any action by the Plan Administrator otherwise, a pro rata allocation of available shares of our common stock
will be made in as nearly a uniform manner as will be practicable and equitable.

Withdrawal

Participants may withdraw from a given offering by delivering a withdrawal form to us and terminating

their contributions. Such withdrawal may be elected at any time prior to the end of an offering, except as
otherwise provided by the Plan Administrator. Upon such withdrawal, we will distribute to the employee his or
her accumulated but unused contributions without interest, and such employee’s right to participate in that
offering will terminate. However, an employee’s withdrawal from an offering does not affect such employee’s
eligibility to participate in subsequent offerings under the Amended 2014 ESPP.

Termination of Employment

Except as required by law, a participant’s outstanding purchase rights under any offering under the Amended

2014 ESPP will terminate immediately upon either (i) termination of the participant’s employment with us
(or any of our parent or subsidiary companies if such company is designated by the Plan Administrator as
eligible to participate in the Amended 2014 ESPP) or (ii) any other circumstance or event that causes the
participant to no longer be eligible to participate in the offering. In such event, we will distribute to the
participant his or her accumulated but unused contributions without interest.

Restrictions on Transfer

Rights granted under the Amended 2014 ESPP are not transferable except by will, the laws of descent and

distribution, or, if permitted by us, by a beneficiary designation. During the lifetime of the participant, such
rights may only be exercised by the participant.

Changes in Capitalization

In the event of certain changes in our capitalization, the Plan Administrator will appropriately and

proportionately adjust: (i) the class(es) and maximum number of securities subject to the Amended 2014 ESPP;
(ii) the class(es) and number of securities subject to, and the purchase price applicable to outstanding offerings
and purchase rights; and (iii) the class(es) and number of securities that are the subject of the purchase limits
under each ongoing offering.

12

Effect of Certain Corporate Transactions

In the event of a corporate transaction (as defined in the Amended 2014 ESPP and described below), each
outstanding purchase right under the Amended 2014 ESPP will be assumed or continued or a similar right will
be substituted for such purchase right by the surviving or acquiring corporation (or its parent or subsidiary),
unless the Plan Administrator determines to shorten any offering periods then in progress by setting a new
purchase date prior to the corporate transaction. If the Plan Administrator sets such a new purchase date, then the
Plan Administrator will notify each participant in writing at least 10 business days prior to the new purchase date
that the purchase date for the participant’s outstanding purchase rights has been changed to such new purchase
date and that either: (i) the participant’s outstanding purchase rights will be exercised automatically on such new
purchase date, unless the participant withdraws from the applicable offering prior to such new purchase date, and
such purchase rights will terminate immediately after such exercise; or (ii) in lieu of such exercise, we will pay
to the participant on such new purchase date an amount in cash, cash equivalents, or property as determined by
the Plan Administrator that is equal to the difference in the fair market value of the shares of common stock
subject to the participant’s outstanding purchase rights on such new purchase date and the applicable exercise
price due had such purchase rights been exercised automatically on such new purchase date, and such purchase
rights will terminate immediately after such payment.

For purposes of the Amended 2014 ESPP, a corporate transaction generally will be deemed to occur in the
event of the consummation of: (i) a merger or consolidation in which we are not the surviving entity, except for
a transaction the principal purpose of which is to change the state in which we are incorporated; (ii) the sale,
transfer or other disposition of all or substantially all of our assets (including the capital stock of our subsidiary
corporations); (iii) our complete liquidation or dissolution; (iv) any reverse merger or series of related
transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse
merger) in which we are the surviving entity but in which securities possessing more than 40% of the total
combined voting power of our outstanding securities are transferred to a person or persons different from those
who held such securities immediately prior to such merger or the initial transaction culminating in such merger
but excluding any such transaction or series of related transactions that the Plan Administrator determines will
not be a corporate transaction; or (v) acquisition in a single or series of related transactions by any person or
related group of persons (other than us or by an employee benefit plan sponsored by us) of beneficial ownership
of securities possessing more than 50% of the total combined voting power of our outstanding securities but
excluding any such transaction or series of related transactions that the Plan Administrator determines will not be
a corporate transaction.

Duration, Amendment and Termination

The Plan Administrator may amend, suspend or terminate the Amended 2014 ESPP at any time. However,
except in regard to certain capitalization adjustments, any amendment must be approved by our stockholders if
such approval is required by applicable law or listing requirements.

Any outstanding purchase rights granted before an amendment, suspension or termination of the Amended
2014 ESPP will not be materially impaired by any such amendment, suspension or termination, except (i) with
the consent of the employee to whom such purchase rights were granted, (ii) as necessary to comply with any
laws, listing requirements or governmental regulations (including Section 423 of the Code), or (iii) as necessary
to obtain or maintain favorable tax, listing or regulatory treatment.

Federal Income Tax Information

The following is a summary of the principal United States federal income taxation consequences to

participants and us with respect to participation in the Amended 2014 ESPP. This summary is not intended to be
exhaustive and does not discuss the income tax laws of any local, state or foreign jurisdiction in which a
participant may reside. The information is based upon current federal income tax rules and therefore is subject to
change when those rules change. Because the tax consequences to any participant may depend on his or her
particular situation, each participant should consult the participant’s tax adviser regarding the federal, state, local,
and other tax consequences of the grant or exercise of an option or the disposition of common stock acquired
under the Amended 2014 ESPP. The Amended 2014 ESPP is not qualified under the provisions of
Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income
Security Act of 1974, as amended.

13

Rights granted under the Amended 2014 ESPP are intended to qualify for favorable federal income tax

treatment associated with rights granted under an employee stock purchase plan which qualifies under the
provisions of Section 423 of the Code.

A participant will be taxed on amounts withheld for the purchase of shares of our common stock as if such
amounts were actually received. Otherwise, no income will be taxable to a participant as a result of the granting
or exercise of a purchase right until a sale or other disposition of the acquired shares. The taxation upon such
sale or other disposition will depend upon the holding period of the acquired shares.

If the shares are sold or otherwise disposed of more than two years after the beginning of the offering
period and more than one year after the shares are transferred to the participant, then the lesser of the following
will be treated as ordinary income: (i) the excess of the fair market value of the shares at the time of such sale
or other disposition over the purchase price; or (ii) the excess of the fair market value of the shares as of the
beginning of the offering period over the purchase price (determined as of the beginning of the offering period).
Any further gain or any loss will be taxed as a long-term capital gain or loss.

If the shares are sold or otherwise disposed of before the expiration of either of the holding periods
described above, then the excess of the fair market value of the shares on the purchase date over the purchase
price will be treated as ordinary income at the time of such sale or other disposition. The balance of any gain
will be treated as capital gain. Even if the shares are later sold or otherwise disposed of for less than their fair
market value on the purchase date, the same amount of ordinary income is attributed to the participant, and a
capital loss is recognized equal to the difference between the sales price and the fair market value of the shares
on such purchase date. Any capital gain or loss will be short-term or long-term, depending on how long the
shares have been held.

There are no federal income tax consequences to us by reason of the grant or exercise of rights under the

Amended 2014 ESPP. We are entitled to a deduction to the extent amounts are taxed as ordinary income to a
participant for shares sold or otherwise disposed of before the expiration of the holding periods described above
(subject to the requirement of reasonableness and the satisfaction of tax reporting obligations).

The following table sets forth, for each of the individuals and various groups indicated, the total number of

shares of our common stock that have been purchased under the 2014 ESPP as of April 6, 2021.

Plan Benefits under 2014 ESPP

2014 ESPP

Name and Position
Ryan Spencer

CEO and Director

David F. Novack

President and Chief Operating Officer

Michael Ostrach

Former Senior Vice President, Chief Financial Officer and Chief Business Officer

Robert Janssen, M.D.

Chief Medical Officer and Senior Vice President, Clinical Development, Medical and
Regulatory Affairs

All current executive officers as a group
All current directors who are not executive officers as a group
Each nominee for election as a director:

Francis R. Cano, Ph.D.
Peter Paradiso, Ph.D.
Peggy V. Phillips

Each associate of any executive officers, current directors or director nominees
Each other person who received or is to receive 5% of purchase rights
All employees, including all current officers who are not executive officers, as a group

14

Number of Shares

7,848

8,671

—

4,086
20,605
—

—
—
—
—
—
677,728

New Plan Benefits under Amended 2014 ESPP

Participation in the Amended 2014 ESPP is voluntary and each eligible employee will make his or her own

decision regarding whether and to what extent to participate in the Amended 2014 ESPP. In addition, we have
not approved any grants of purchase rights that are conditioned on stockholder approval of this Proposal 2.
Accordingly, we cannot determine the benefits or amounts that will be received in the future by individual
employees or groups of employees under the Amended 2014 ESPP. Our non-employee directors will not be
eligible to participate in the Amended 2014 ESPP. Mr. Ostrach retired from the Company effective March 31,
2021 and, therefore, will not be eligible to participate in the Amended 2014 ESPP.

Vote Required

The affirmative vote of the holders of a majority of shares present (either in person or by proxy) and
entitled to vote on the matter at the Annual Meeting will be required to approve this Proposal 2. Abstentions will
be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same
effect as negative votes. Broker non-votes are counted towards a quorum but are not counted for any purpose in
determining whether this Proposal 2 has been approved.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.

15

EQUITY COMPENSATION PLAN INFORMATION

The following table shows provides certain information about our equity compensation plans as of the fiscal

year ended December 31, 2020.

Number of
securities to
be issued upon exercise
of outstanding options,
warrants and rights

Weighted-average
exercise price of
outstanding
options, warrants
and rights(3)

Number
of securities remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected in
the first column)

3,426,009
—
6,721,119

$18.64
$ —
$ 6.66

—
255,583
8,349,853

Plan Category
Equity compensation plans approved by security

holders:
2011 Equity Incentive Plan
2014 Employee Stock Purchase Plan(1)
2018 Equity Incentive Plan

Equity compensation plans not approved by security

holders:

2017 Inducement Award Plan(2)

—
8,605,436
(1) As of December 31, 2020, an aggregate of 255,583 shares remained available for future issuance under the 2014 Employee Stock

151,777
10,298,905

$17.55
$11.57

Total:

Purchase Plan, and as of April 6, 2021, up to a maximum of 151,667 shares may be purchased in the current purchase period.

(2)

In order to induce qualified individuals to join our Company, on November 28, 2017, our Board adopted the 2017 Inducement Award
Plan, or the 2017 Inducement Plan, which provided for the issuance of up to 1,200,000 shares of Company common stock to new
employees of the Company. Stockholder approval of the 2017 Inducement Plan was not required under Nasdaq Marketplace
Rule 5635(c)(4). Upon the effectiveness of the 2018 Equity Incentive Plan, no additional awards were granted under the 2017
Inducement Plan. All shares currently subject to awards outstanding under the 2017 Inducement Plan, which awards expire or are
forfeited, are included in the reserve for the 2018 Equity Incentive Plan to the extent such shares would otherwise return to such plan.
Awards granted under the 2017 Inducement Plan have a term of 10 years. Exercisability, option price and other terms are determined
by the plan administrator, but the option price cannot be less than 100% of fair market value of those shares on the date of grant. Stock
options granted under the 2017 Inducement Plan generally vest over a period of four years, with the exception of performance-based
awards which will vest upon achievement of certain performance conditions.

(3)

1,794,153 shares subject to restricted stock units (RSUs) were granted under the 2011 Equity Incentive Plan and 2018 Equity Incentive
Plan. Since these awards have no exercise price, they are not included in the weighted-average exercise price calculation.

16

PROPOSAL 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities
Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), Dynavax stockholders are being asked to approve, on
an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement, which
is commonly referred to as a ‘‘say-on-pay vote.’’ This vote is not intended to address any specific item of
compensation, but rather the overall compensation of our named executive officers, which results from our
compensation philosophy, policies and practices as discussed in this proxy statement. The compensation of our
named executive officers subject to the say-on-pay vote is described in the Compensation Discussion and
Analysis, the accompanying tables, and the related narrative disclosure contained in this proxy statement.

Our Compensation Committee is responsible for designing and administering our executive compensation

programs. Our Compensation Committee firmly believes that Dynavax’s executive compensation programs
should reward our named executive officers for performance, and that when key performance objectives are not
achieved, the compensation of our named executive officers should reflect as much. We believe that the
compensation of our named executive officers, as disclosed in this proxy, reflects this philosophy. In addition,
our Compensation Committee believes that the compensation programs for our named executive officers have
been instrumental in helping Dynavax be able to attract, retain and motivate our executive team, thereby enabling
our company to be in a position to move forward with our business strategy.

Our Board of Directors is now asking our stockholders to indicate their support for the compensation of our
named executive officers as described in this proxy statement by casting a non-binding advisory vote ‘‘For’’ the
following resolution:

‘‘RESOLVED, that the compensation paid to Dynavax’s named executive officers, as disclosed pursuant to

Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and
narrative discussion, is hereby APPROVED.’’

Although this vote is advisory and the outcome is not binding on our Board, the views expressed by our

stockholders, whether through this vote or otherwise, are important to us. As a result, the Board and the
Compensation Committee will carefully review the results of this vote, and they will consider these results in
making future decisions about our executive compensation programs and arrangements.

Unless our Board modifies its policy on the frequency of future advisory votes on the compensation of our

named executive officers, which are currently submitted to stockholders on an annual basis, the next advisory
vote on the compensation of our named executive officers will be held at the 2022 annual meeting of
stockholders.

Vote Required

Approval of this advisory proposal requires the affirmative vote of the holders of a majority of shares
present (either in person or by proxy) and entitled to vote on the matter at the Annual Meeting. Abstentions will
be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same
effect as negative votes. Broker non-votes are counted towards a quorum but are not counted for any purpose in
determining whether this Proposal 3 has been approved.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.

17

PROPOSAL 4

RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected Ernst & Young LLP, or Ernst & Young, as our independent registered
public accounting firm for the fiscal year ending December 31, 2021. Ernst & Young has audited our financial
statements since 2002. Representatives of Ernst & Young are expected to be present at the Annual Meeting.
Ernst & Young will have an opportunity to make a statement if it so desires and will be available to respond to
appropriate questions.

If the stockholders fail to ratify the selection of Ernst & Young, the Audit Committee will reconsider
whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may
direct the appointment of a different independent registered public accounting firm at any time during the year if
it determines that such a change would be in the best interests of the Company and its stockholders.

Vote Required

The affirmative vote of the holders of a majority of the shares present (either in person or by proxy) and
entitled to vote on the matter at the Annual Meeting will be required to ratify the selection of Ernst & Young.
Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and
will have the same effect as negative votes. Broker non-votes are counted towards a quorum but are not counted
for any purpose in determining whether this matter has been approved; however, Proposal 4 is considered a
‘‘routine’’ matter, and therefore no broker non-votes are expected in connection with this Proposal 4.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.

AUDIT FEES

In connection with the audit of our 2020 financial statements, we entered into an engagement agreement

with Ernst & Young which sets forth the terms by which Ernst & Young will perform audit services for us.

The following table represents aggregate fees billed to the Company for the fiscal years ended

December 31, 2020 and 2019 by Ernst & Young, our principal auditors. The Audit Committee pre-approved all
service fees described below.

Audit Fees(1)
Audit Related Fees
Tax Fees(2)
All Other Fees(3)
Total Fees

2019
$1,475,391
—
46,550
1,995
$1,523,936
(1) Audit fees include fees for the audit of our consolidated financial statements and interim reviews of our quarterly financial statements,

2020
$1,729,615
—
72,167
2,000
$1,803,782

Fiscal Year Ended

including compliance with the provisions of Section 404 of the Sarbanes-Oxley Act as well as fees related to registration statements,
consents and other services related to SEC matters. In each of 2019 and 2020, audit fees included fees related to a comfort letter in
connection with an equity offering.

(2)

Tax fees include Section 382 study and other tax advisory services.

(3) All other fees represent subscription fees for an online accounting research tool and related database.

PRE-APPROVAL POLICIES AND PROCEDURES

Our Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit

services rendered by our independent registered public accounting firm, Ernst & Young. Under the policy, the
Audit Committee pre-approves specified services in the defined categories of audit services, audit-related
services, tax services and all other services up to specified amounts. Pre-approval may be given as part of the
Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm
or on an interim basis by the Audit Committee Chair, as needed and on a case-by-case basis before the
independent registered public accounting firm is engaged to provide each service.

The Audit Committee has determined that services rendered by Ernst & Young are compatible with

maintaining the principal auditors’ independence.

18

EXECUTIVE OFFICERS

The following table sets forth certain information with respect to our executive officers as of April 6, 2021:

Name
Ryan Spencer(1)
David F. Novack
Kelly MacDonald
Robert Janssen, M.D.

Age
43 Chief Executive Officer and Director
President and Chief Operating Officer
59
Senior Vice President, Chief Financial Officer
37
67 Chief Medical Officer and Senior Vice President, Clinical Development,

Position

(1)

Please see ‘‘Proposal 1 – Election of Directors’’ in this proxy statement for more information about Mr. Spencer.

Medical and Regulatory Affairs

David F. Novack – President and Chief Operating Officer

Mr. Novack joined Dynavax in March 2013 as Senior Vice President, Operations and Quality, served as an

interim co-President between May and December 2019, and has served as our President and Chief Operating
Officer since December 2019. Mr. Novack was formerly with Novartis Vaccines & Diagnostics where he served
since 2009 as the Global Head of Technical Operations and Supply Chain for Diagnostics and previously from
2007 to 2009 as the Global Head of Vaccine Manufacturing Strategy. Prior to Novartis, Mr. Novack was the
Vice President, Business Development for Vaxin, Inc., a vaccine company, from 2004 to 2006. From 1993 until
2004, Mr. Novack worked at MedImmune, formerly Aviron, serving in several capacities including business
development, manufacturing, contract operations and most recently as Senior Director, Supply Chain Operations.
Previously, from 1989 to 1993, Mr. Novack was with American Cyanamid Company in various roles.
Mr. Novack received a B.S. in Biology from State University of New York and an M.B.A. from Columbia
University.

Kelly MacDonald – Senior Vice President, Chief Financial Officer

Ms. MacDonald joined Dynavax in March 2021 as Chief Financial Officer. Ms. MacDonald was formerly
with Ironwood Pharmaceuticals, Inc. (‘‘Ironwood’’), from 2013 to 2021 in roles of increasing responsibility, most
recently as Chief Accounting Officer and Vice President, Finance where she led the company’s corporate
accounting and finance processes, enterprise risk management, treasury and capital allocation strategy. While at
Ironwood, she also held various other finance and accounting managerial roles where she provided financial
advice on the company’s strategic planning, accounting policies, R&D portfolio management, global business
development, product launches and commercial execution. Prior to joining Ironwood, Ms. MacDonald spent
nearly seven years at PriceWaterhouseCoopers, LLP, ultimately serving as a Manager in the Health Industries
Assurance Practice, primarily serving clients in life sciences and technology sectors. Ms. Macdonald is a CPA
and holds a Master of Business Administration from the Isenberg School of Management at the University of
Massachusetts and a Bachelor of Science in Accounting from Fairfield University.

Robert Janssen, M.D. – Chief Medical Officer and Senior Vice President, Clinical Development, Medical
and Regulatory Affairs

Dr. Janssen was appointed Chief Medical Officer and Senior Vice President, Clinical Development, Medical

and Regulatory Affairs in January 2018. Dr. Janssen was appointed Chief Medical Officer and Vice President,
Clinical Development and Regulatory Affairs in July 2013. He served as Dynavax’s Vice President, Medical
Affairs since November 2012 and was previously Senior Director, Clinical Development at Dynavax from 2010
through 2012, during which time he was extensively involved with Phase 3 clinical development of
HEPLISAV-B and its U.S. and European licensing applications. Prior to joining Dynavax, Dr. Janssen was Vice
President, Medical Affairs at Gilead from 2008 to 2010 where he was responsible for oversight of physician and
health care provider education focused on HIV and hepatitis B therapies. Until 2008, Dr. Janssen spent 23 years
at the U.S. Centers for Disease Control and Prevention (‘‘CDC’’), most recently as the Director of the Division
of HIV/AIDS Prevention from 2000 to 2008. Under his leadership, the CDC first explored HIV treatment as a
mode of HIV prevention and launched several of the earliest Phase 3 trials of pre-exposure prophylaxis for HIV.
Dr. Janssen received a Bachelor of Arts degree with Honors in Humanities from Stanford University and his
M.D. degree from the University of Southern California. He is a neurologist with training in virology received at
the University of Pennsylvania. Dr. Janssen has been the beneficiary of numerous honors and awards during his
career. He has published over 130 scientific articles in a variety of journals and has served as a reviewer for
leading scientific journals.

19

COMPENSATION DISCUSSION AND ANALYSIS

Overview

This Compensation Discussion and Analysis discusses our executive compensation philosophy and practices

and provides an overview of the Compensation Committee’s 2020 decisions for the following named executive
officers (‘‘NEOs’’) whose compensation is set forth in the Summary Compensation Table and other related tables
contained in this proxy statement:

•

•

Ryan Spencer, Chief Executive Officer and Director;

David F. Novack, President and Chief Operating Officer;

• Michael S. Ostrach, former Senior Vice President, Chief Financial Officer and Chief Business Officer;

and

•

Robert Janssen, M.D., Chief Medical Officer and Senior Vice President, Clinical Development, Medical
and Regulatory Affairs; and

Business Overview

We are a commercial stage biopharmaceutical company focused on developing and commercializing novel

vaccines. Our first marketed product, HEPLISAV-B® (Hepatitis B Vaccine (Recombinant), Adjuvanted), is
approved by the United States Food and Drug Administration (‘‘FDA’’) for prevention of infection caused by all
known subtypes of hepatitis B virus in adults age 18 years and older. HEPLISAV-B is the only two-dose hepatitis
B vaccine for adults approved in the U.S. In Phase 3 trials, HEPLISAV-B demonstrated faster and higher rates of
protection with two doses in one month compared to another currently approved hepatitis B vaccine, which
requires three doses over six months, with a similar safety profile. We have worldwide commercial rights to
HEPLISAV-B and we market it in the United States. We received Marketing Authorization approval of
HEPLISAV-B in February 2021 from the European Commission following a positive recommendation in
December 2020 from the European Medicines Agency (‘‘EMA’’) Committee for Medicinal Products (‘‘CHMP’’)
for Human Use for prevention of infection caused by all known subtypes of hepatitis B virus in adults age
18 years and older. We expect to launch HEPLISAV-B in the European Union (‘‘EU’’) in late 2021, initially
focusing on one or a few key countries where it would be commercially feasible to market HEPLISAV-B on our
own or through third-parties.

We also manufacture and sell CpG 1018, the adjuvant used in HEPLISAV-B. We developed CpG 1018 to
provide an increased vaccine immune response, as demonstrated in HEPLISAV-B. We are working to expand the
use of CpG 1018 to support the potential development and large-scale manufacturing of additional vaccines for
our own vaccine development programs as well as through collaborations with multiple vaccine companies and
academic groups. We have several current collaborations that are focused on adjuvanted vaccines for COVID-19,
several of which are in clinical development. In September 2020, we also entered into a commercial supply
agreement with our collaborator Valneva Scotland Limited (‘‘Valneva’’) to supply them with CpG 1018 to
produce as many as 60 to 100 million doses of their vaccine in 2021, and up to an additional 90 million doses
through 2024. Our tetanus, diphtheria, and acellular pertussis (‘‘Tdap’’) booster vaccine candidate, also
adjuvanted with CpG 1018, is in a Phase 1 study, and a CpG 1018 based influenza vaccine is also expected to
enter clinical development during 2021.

Corporate Developments in 2020 and Early 2021

During 2020, our business was focused on continued commercialization of HEPLISAV-B in the U.S.,
entering into arrangements with our collaborators who are focused on developing COVID-19 vaccines of their
own, advancing our CpG 1018 adjuvant as a broadly useful vaccine adjuvant platform, achieving our Marketing
Authorization Application (‘‘MAA’’) for HEPLISAV-B in Europe, collaborating with other vaccine developers to
help develop novel vaccines using CpG 1018 for pertussis and influenza, as well as other potential vaccine
candidates targeted at other indications. CpG 1018 was approved by the FDA as a component of HEPLISAV-B.
During 2020 we also executed on our 2019 decision to wind down our immuno-oncology (‘‘I/O’’) business by
entering into an asset purchase agreement pursuant to which we sold our SD-101 I/O assets for cash plus
development milestone payments and royalties on potential future net sales.

20

Given that full commercialization of a new vaccine takes several years and the long product development

cycles in our business, we believe delivery of long-term value to our stockholders is the best measure of our
performance.

In addition to executing on our strategic focus, Messrs. Spencer and Novack, our other NEOs, and our

broader leadership team devoted substantial time and energy last year ensuring an orderly transition of the
Company through the period of significant change, including but not limited to converting to a nearly fully
remote workforce in light of the COVID-19 pandemic, pursuing licensure of HEPLISAV-B in Europe, scaling
our available capacity to supply CpG 1018 and other changes associated with our the new strategic focus, the
impact from COVID-19 restrictions and associated needs.

Currently, we believe the potential net sales for total U.S. adult hepatitis B vaccines is over $400 million

annually and could reach up to approximately $600 million in net sales annually. Our field sales force of
approximately 65 people is sized to cover approximately 70% of hepatitis B vaccine sales in the U.S.

In furtherance of our strategic focus, our NEOs focused on executing our HEPLISAV-B business strategy by

continuing to work toward successful commercialization of HEPLSIAV-B, bolstering our in-house sales force,
enhancing our sales strategy, further developing a distribution network, and working to achieve sufficient
manufacturing capacity to help ensure we successfully meet demand and that such manufacturing was done in
accordance with applicable quality requirements. With respect to growing our adjuvant sales, our NEOs acted
nimbly throughout the year to increase our capacity to supply CpG 1018 for ourselves and for our collaborators,
and entered into numerous preclinical and clinical collaborations, some of which are currently in clinical trials
and some of which have already yielded commercial supply agreements and revenue. Under these commercial
agreements, we are selling CpG 1018 as an adjuvant for vaccines developed by our collaborators. In addition, we
recognized the importance of completing our post-marketing safety study as well as our study of the use of
HEPLISAV-B in patients undergoing hemodialysis. Our NEOs also focused on vaccine development, growing our
pipeline and completing the wind-down of our immuno-oncology program.

Despite the significant challenges brought about by the COVID-19 pandemic, we believe that 2020 was a

year of many positive developments for our Company that positioned us for future success. For example, we
believe that our orientation toward a pure-play vaccine business as well as efforts to scale our adjuvant business
have positioned the Company well for the future. And for HEPLISAV-B, we continued the commercialization
process with further significant strides in our sales efforts, we increased our market share in field targeted
accounts, we demonstrated continued compliance with quality requirements, and all despite the headwinds
provided by the pandemic. We also completed our post-marketing safety study and are awaiting final results. We
believe that each of these developments served to lay a foundation for future commercial success for
HEPLISAV-B and CpG 1018 through continued advocacy and adoption efforts.

HEPLISAV-B

For 2020, we note several key accomplishments pertaining to HEPLISAV-B. From a product sales

perspective, we achieved annual HEPLISAV-B product revenues, net of $36.0 million in 2020, as compared to
$34.6 million in 2019, despite a significant decrease in adult vaccine utilization due to the COVID-19 pandemic.
We increased our market share in field targeted accounts from 20% to 26%, and we converted two major
national retail pharmacy chains.

In addition, as a result of substantial efforts expended during 2020, we received Marketing Authorization

approval of HEPLISAV-B in February 2021 from the European Commission following a positive
recommendation in December 2020 from the European Medicines Agency Committee for Medicinal Products for
Human Use for prevention of infection caused by all known subtypes of hepatitis B virus in adults aged 18 years
and older. We are continuing with our plans to launch HEPLISAV-B in the European Union in late 2021, initially
focusing on one or a few key countries where it would be commercially feasible to market HEPLISAV-B on our
own or through third-parties.

During 2020 we also made progress on our open-label, single-arm study of HEPLISAV-B in adults with

end-stage renal disease who are initiating or undergoing hemodialysis. The primary endpoints were to evaluate
the immunogenicity induced by HEPLISAV-B at week 20 as measured by seroprotection rate and to evaluate the
safety of HEPLISAV-B with respect to clinically significant adverse events. In the trial, four doses of
HEPLISAV-B induced a seroprotection rate of 89.3 percent at week 20, with high anti-HBs antibodies. Interim

21

safety data showed HEPLISAV-B is well tolerated and no safety concerns were observed. We currently expect
that the last patient visit will be in September 2021. Final safety data is expected to be available by the end of
the year. The safety and effectiveness of HEPLISAV-B in adults on hemodialysis have not been established.

In December 2019, we filed a report on a cumulative analysis (comprising both required interim analyses)

of our post-marketing study of HEPLISAV-B for review by the FDA. The study is assessing the rates of
occurrence of acute myocardial infarction (‘‘AMI’’) in persons receiving HEPLISAV-B compared with
Engerix-B. The interim report assesses unadjudicated events of AMI. The event rates in this interim analysis
were similar between the two treatment arms. The independent data monitoring committee concurred this
analysis showed no evidence of an increase in AMI events in the HEPLISAV-B arm. The study was initiated in
August 2018 and concluded in November 2020. We expect to receive final results toward the middle of 2021.

CpG 1018 COLLABORATION ACTIVITY

CpG 1018 is the proprietary Dynavax adjuvant contained in HEPLISAV-B, which demonstrated higher rates

of immunogenicity with lower doses compared to prior existing hepatitis-b vaccines. With our strategic
transformation to focus on our vaccine business, CpG 1018 represents a valuable asset of Dynavax. That value
grew substantially during 2020, as evidenced by the numerous collaborations we entered into during the year and
by the number of trials for COVID-19 vaccines utilizing CpG 1018 that were initiated during the year. These
efforts culminated in our first CpG 1018 revenue and in September 2020, we announced a commercial supply
agreement with Valneva that has potential to yield up to $230 million in CpG 1018 sales in 2021. We are
continuing to seek to leverage CpG 1018 to develop new and improved vaccines of our own as well as through
collaborative efforts with our partners. In February 2021, we announced an agreement with the Coalition for
Epidemic Preparedness Innovations (‘‘CEPI’’) under which CEPI agreed to provide financing of up to
$99 million in order to further support development, manufacturing and distribution of vaccines to help end the
acute phase of the COVID-19 pandemic, which could potentially comprise hundreds of millions of doses. We
have an on-going collaboration with Serum Institute of India, Ltd., the world’s largest vaccine manufacturer, to
develop vaccines containing CpG 1018, including an improved pertussis vaccine.

FINANCING

In May 2020, we completed an underwritten public offering that provided proceeds of approximately
$75.4 million, net of issuance costs of $5.1 million. This and other financing activities undertaken during the
year helped strengthen our balance sheet and put us in a better position to invest in our own future.

I/O ASSET SALE

We wound down our immuno-oncology (‘‘I/O’’) program in 2019. In 2020 we also entered into an asset
purchase agreement pursuant to which we sold the bulk of our SD-101 I/O assets for cash plus development
milestone payments and royalties on potential future net sales.

Compensation Governance Highlights

☒ Design executive compensation program to align

☒ No excessive change in control or severance

What we do

What we do not do

pay with performance

☒ Prohibit hedging and discourage pledging by
executive officers and directors (no pledging
occurred in 2020)

payments (no cash severance multiplier greater
than 1.75x base + target bonus)

☒ No repricing of underwater stock options without

stockholder approval

☒ Grant equity awards with performance-based

☒ No tax gross-ups

vesting of greater than one year
☒ Conduct an annual say-on-pay vote
☒ Seek input from, listen to and respond to

stockholders

☒ No excessive perquisites
☒ No guaranteed bonuses

Consideration of Our Prior Say-on-Pay Votes and Related Stockholder Engagement

In 2016, our Board of Directors adopted, and our stockholders approved, a policy that we would hold a

say-on-pay vote on a yearly basis. Since adjusting to an annual say-on-pay practice, we have experienced

22

continued favorable voting results with our say-on-pay practices. The results of the past three years’ voting have
been 95%, 75%, and 92% in fiscal years 2018, 2019, and 2020, respectively, of stockholders voting in favor of
our pay practices.

We routinely seek and obtain feedback from our stockholders throughout the course of the year. In addition, we
seek feedback from the governance teams of our largest institutional stockholders each year pertaining to
executive compensation. In late 2020 and early 2021, we reached out to engage with the governance teams of
our 25 largest investors, representing 71% of our shares outstanding. We spoke with 100% of the stockholders
that wanted to provide us with feedback at that time about our executive compensation practices. During these
discussions, which included an opportunity for detailed questions, none of our stockholders expressed any
concerns about our executive compensation practices. The bulk of the stockholders, while appreciating the
outreach, did not feel a need to talk at the time. Additionally, we considered feedback from Institutional
Shareholder Services and Glass Lewis. Based on this combined feedback, we maintained the following practices
for our long-term equity incentive awards: (1) we allocated 25% of the aggregate target award value for each
NEO in the form of performance-based restricted stock units (‘‘RSUs’’), with the remaining 75% allocated in the
form of time-based stock options, the long-term value of which is determined by long-term stock performance;
and (2) we set performance goals that could realistically be expected to take longer than a year to be completed
for the performance-based RSUs.

Executive Compensation Philosophy and Objectives

We believe our NEOs’ compensation should align our executives’ success with that of our stockholders over
the long-term through achievement of strategic corporate objectives that are fundamental to our business and that
are intended to create long-term stockholder value. Our executive compensation programs are designed to be
competitive with our peer group to enable us to attract, motivate, reward, and retain outstanding talent. Our
compensation programs are based on the following key principles:

•

•

•

•

Link a significant proportion of pay with performance and the achievement of our strategic goals;

Align our executives’ interests with those of our stockholders through equity compensation;

Achieve a mix of overall compensation that is competitive in the industry in which we compete for
executive talent; and

Recognize individual contributions, teamwork and corporate performance.

Compensation-Setting Process

Role of the Compensation Committee and Management

The Compensation Committee oversees and administers our executive compensation programs. The
Compensation Committee acts pursuant to a charter adopted by our Board, which can be found at our website,
www.dynavax.com. The Compensation Committee generally determines the compensation to be paid to the
executive officers, including our NEOs. Either the Compensation Committee or the independent members of our
Board, upon recommendation from the Compensation Committee, approve certain compensation of our CEO, and
references in this Compensation Discussion and Analysis to our Board approving our CEO’s compensation refer
to the independent members of our Board.

The Compensation Committee (and the board of directors, with respect to our CEO) approves our corporate
goals and the individual goals of our NEOs after considering the Company’s recommendations on these matters.
The Compensation Committee annually reviews the base salaries, cash incentives and equity compensation of our
NEOs and periodically reviews other elements of our compensation. Compensation decisions are based primarily
on the following:

•

•

Peer and Industry Data – The Compensation Committee uses peer and industry data provided by its
consultant, Arnosti Consulting Inc. (‘‘Arnosti’’), as a reference in setting base salaries and target cash
compensation, determining appropriate levels and mix of equity compensation and determining the type
and portion of compensation tied to performance goals.

Annual Performance Reviews – The Chair of the Compensation Committee conducts annual
performance reviews of our CEO taking into consideration feedback obtained during the course of the

23

year from the independent members of our Board and the CEO’s direct reports. Our CEO conducts and
presents the performance reviews of the other NEOs to the Compensation Committee after the end of
each fiscal year. In reviewing and determining the compensation of each NEO, the Compensation
Committee also considers individual factors, such as potential for future contributions to Company
growth, industry experience and retention concerns.

•

CEO Recommendations – The Compensation Committee seeks input from our CEO for setting the
salary and target cash compensation levels for the other NEOs, and also for purposes of setting annual
performance metrics and target amounts under our annual incentive program.

Role of Compensation Consultant

Arnosti has been the Compensation Committee’s independent compensation consultant since 2010, and the
Compensation Committee meets regularly with Arnosti, both with and without management present, depending
upon the topic being discussed.

During the first quarter of 2020, the Compensation Committee reviewed whether the work of Arnosti as a

compensation consultant raised any conflict of interest, taking into consideration the following factors:

•

•

•

•

•

The provision of other services to the Company;

The amount of fees paid to Arnosti by the Company;

Arnosti’s policies and procedures that are designed to prevent conflicts of interest;

Any business or personal relationship of Arnosti or the individual compensation advisors employed by
Arnosti with an executive officer of the Company; and

Any Company stock owned by Arnosti or the individual compensation advisors contracted by Arnosti.

Based on the Compensation Committee’s review of this information, it determined the work of Arnosti and

the individual compensation advisors contracted by Arnosti as compensation consultant to the Compensation
Committee, did not create any conflict of interest. The Compensation Committee has the sole authority to direct,
terminate or continue Arnosti’s services, although the Company pays the cost for Arnosti’s services.

In 2020, Arnosti provided advice to the Compensation Committee on several different aspects of its
responsibilities related to our compensation programs and practices. Specifically, during 2020, Arnosti assisted
the Compensation Committee as follows:

•

•

•

•

•

Provided recommendations to the Compensation Committee on refining our peer group;

Provided general information concerning executive compensation trends and developments;

Reviewed and analyzed compensation levels of our NEOs in comparison to those of our peer
companies;

Provided the Board with a review of competitive data from the peer group on Board compensation; and

Reviewed the Compensation Discussion and Analysis for inclusion in our proxy statement.

2020 Peer Group and Use of Market Data

Our Compensation Committee primarily uses relevant publicly disclosed market data for a general
understanding of executive market compensation practices and our positioning within the market, including
within our peer group. Our Compensation Committee believes that over-reliance on benchmarking could result in
compensation that is unrelated to the value delivered by the NEOs because compensation benchmarking does not
take the specific performance of the NEOs, or the performance of the Company in its unique circumstances, into
account.

Our Compensation Committee does not have a specific target compensation level for the NEOs or otherwise

use a formulaic approach to setting pay at a particular positioning within the market data; rather, the
Compensation Committee reviews a range of market data reference points including relevant Radford Global Life
Sciences survey data as well as data from the Company’s peer group with respect to total target cash
compensation (including both base salary and the annual target performance bonus) and equity compensation

24

(valued based on disclosed grant date fair value and also considered as shares as a percentage of total common
shares outstanding) to support its compensation decisions.

For 2020, our Compensation Committee approved a peer group of biotechnology companies at a similar
stage of their life-cycle with which we compete for executive talent that were of similar size to the Company in
terms of market capitalization (targeting .3x to 3x our own market capitalization, with some exceptions for
companies it felt were nonetheless good comparators), product portfolio, pipeline and number of employees. To
align with our strategic plan at that time, which included commercialization of HEPLISAV-B in the U.S.,
pursuing licensure for HEPLISAV-B in Europe and obtaining a favorable policy recommendation from the CDC
Advisory Committee on Immunization Practices (‘‘ACIP’’) for HEPLISAV-B in the U.S., our peer group
included companies that:

• Were commercial-stage companies having already filed for an IND;
• Were pure-play vaccine developers; and
•

Had their own manufacturing operations, where possible.

The change in our peer group from 2019 to 2020 included removing 15 companies for various reasons
including market caps that were out of range or because such companies were not yet in, or not very close to,
commercial stage. The companies that were removed were Acadia, Acceleron, Aduro, Alder, Amicus, Arcus,
Array, Epizyme, Holzyme, Insmed, The Medicines Company, Pacira, Repligen Supernus, and TG Therapeutics.
The following 7 companies were added to the peer group: AMAG, Ardelyx, Adamas, Akebia, Karyopharm,
Rigel, and Retrophin. As of September 2019, the point at which the Compensation Committee approved the 2020
peer group, the companies in the 2020 peer group had market capitalizations ranging between $127 million to
$2.2 billion, and the median market capitalization of our peer group was $427 million. At the same point in time,
our market capitalization was $372 million. The following table lists our 2020 peer group:

• Acorda Therapeutics, Inc.
• Adamas Pharmaceuticals Inc.
• Akebia Therapeutics, Inc.
• AMAG Pharmaceuticals, Inc.
• Ardelyx, Inc.
•
•

Biocryst Pharmaceuticals, Inc.
ChemoCentryx, Inc.

Clovis Oncology, Inc.
Eagle Pharmaceuticals, Inc.
Five Prime Therapeutics Inc.

•
•
•
• Heron Therapeutics, Inc.
•
• Karyopharm Therapeutics, Inc.
• Macrogenics, Inc.

Immunogen, Inc.

• Momenta Pharmaceuticals, Inc.
• Novavax, Inc.
•
•
•
•
•

Portola Pharmaceuticals, Inc.
Puma Biotechnology, Inc.
Retrophin, Inc.
Rigel Pharmaceuticals, Inc.
Theravance Biopharma, Inc.

Elements of Executive Compensation

Our executive team continues to manage a changing and increasingly complex business. We strive to
recognize these efforts by compensating our NEOs for the demands and risks associated with our business
through three primary elements that are designed to reward performance in a simple and straightforward manner
– base salaries, annual performance-based cash incentives and long-term equity incentive awards. During our
annual stockholder outreach, our key stockholders expressed support for the elements of our executive
compensation program, including our continued use of a mix of time-based stock options and performance-based
RSUs. As reflected in the chart below, we utilized performance-based vesting for a portion of our 2020 long-term
equity incentive awards.

The table below summarizes the purpose and key characteristics of each of our compensation elements.

Element
Base Salary

Purpose
Provides a fixed level of compensation
for performing the essential elements of
the job; gives executives a degree of
certainty in light of having a majority of
their compensation at risk.

Key Characteristics

Fixed compensation that is reviewed
annually and adjusted if and when
appropriate; reflects each NEO’s
performance, experience, skills, level of
responsibility and the breadth, scope and
complexity of the position as well as the
competitive marketplace for executive talent
specific to our industry.

25

Element
Annual Cash
Incentive Program

Purpose
Motivates executive officers to achieve
corporate and individual business goals,
which we believe increase stockholder
value, while providing flexibility to
respond to opportunities and changing
market conditions.

Key Characteristics

Annual cash incentive based on corporate
and individual performance compared to
pre-established goals. For 2020, each of our
Chief Executive Officer’s and President and
Chief Operating Officer’s annual incentive
was based on corporate goals only.

Corporate goals focus on overarching
objectives for the Company which will
support long-term value, while individual
objectives are aligned to corporate objectives
and other strategic priorities of the
Company.

Corporate goals are aligned with our
business strategy and weighted by relative
importance so that overall corporate
achievement can be objectively measured.
Stock options with an exercise price equal to
the fair market value on the date of grant
vesting over three years; the ultimate value
realized, if any, depends on the appreciation
of our common stock price following grant.
If our stock price does not appreciate, there
is no value realized. In determining the
aggregate size of equity grants in any given
year, the Compensation Committee generally
considers the same factors described above
under ‘‘Base Salaries’’ as well as the
criticality of the executive to the long-term
achievement of corporate goals.

In 2020, we targeted roughly 75% of our
NEO’s annual grant value to be time-based
options.

From time to time, we may also use special
grants of stock options to encourage
retention or for other purposes as determined
by the Board. No such special stock options
were granted to NEOs in 2020.
Restricted stock unit awards may vest based
on continued service over a specified period
of time and/or achievement of performance
goals; the ultimate value realized varies with
our common stock price. During 2020 we
only granted performance RSUs to NEOs.
We did not grant any time-based RSUs to
our NEOs.

In 2020, we targeted roughly 25% of our
NEO’s annual grant value to be
performance-based RSU awards vesting

Long-Term Equity
Incentive Awards
(Stock Options)

Motivates executive officers to achieve
our business objectives by tying
incentives to the appreciation of our
common stock over the long term.

Long-Term Equity
Incentives (RSUs)

Motivates executive officers to achieve
our corporate objectives by tying
compensation to the performance of our
common stock over the long term;
provides motivation for our executive
officers to remain with the Company by
mitigating swings in incentive values
during periods when market volatility
weighs on our stock price.

26

Element

Purpose

Key Characteristics

upon the Compensation Committee’s
certification of achievement of
pre-established performance goals discussed
below.

From time to time, we may also use special
RSU awards to encourage retention or for
other purposes as determined by the Board.
No such special RSUs were granted to
NEOs in 2020.
Indirect compensation element consisting of
programs such as medical, vision, dental,
life and accidental death, long-term care and
disability insurance as well as a 401(k) plan
with a Company matching contribution, and
other plans and programs made available to
all regular full-time employees.
Provides protection in the event of a
termination of employment under specified
circumstances, including following a change
in control of our Company as described
below under ‘‘Potential Payments Upon
Change in Control or Involuntary
Termination.’’

Other
Compensation

Severance and
Change in Control
Benefits

Our executive officers participate in the
same benefits offered to all other
employees, which promote employee
health and welfare and assist in
attracting and retaining our executive
officers.

Serves our retention objectives by
helping our named executive officers
maintain continued focus and dedication
to their responsibilities to maximize
stockholder value, including in the event
of a transaction that could result in a
change in control of our Company.

2020 Executive Compensation Decisions

Total Target Cash Compensation – Base Salaries and Target Bonus Percentages

When determining 2020 base salary and target bonus percentage adjustments, the Compensation Committee

considered each individual’s performance and criticality, each individual’s industry experience and tenure,
internal pay equity, and retention concerns. The Compensation Committee also reviewed a range of market data
reference points (including the 10th, 25th, 50th, 60th, 75th and 90th percentiles of market and peer group data) with
respect to total target cash compensation (including both base salary and the annual target performance bonus).

The Compensation Committee (and the Board, with respect to Mr. Spencer) decided that for 2020 each
NEO’s target bonus percentage would remain the same as in 2019 and base salaries would be increased as shown
in the table below, except for Mr. Spencer’s, which was increased from 50% to 60% effective January 1, 2020 in
connection with his promotion to Chief Executive Officer and Mr. Novack’s, which was increased from 50% to
55% effective January 1, 2020 in connection with his promotion to President and Chief Operating Officer. In
determining NEO compensation, the Compensation Committee considers disclosed peer group and survey data;
each NEO’s industry experience, expertise, and tenure with the Company; internal pay equity; and the
Company’s annual salary budget.

Name
Ryan Spencer
David F. Novack
Michael S. Ostrach
Robert Janssen, M.D.
(1)

2020 Base Salary
$515,000
$495,000
$464,398
$466,930

% Increase
from Prior
Year(1)
0%
0%
3%
3%

2020 Target
Bonus
60%
55%
50%
50%

Because Messrs. Spencer and Novack received raises in connection with their promotions in late 2019, no additional increase was
included as part of our 2020 merit cycle. Mr. Ostrach and Dr. Janssen received merit increases for 2020 based on prior year
performance, and consistent with past practice.

27

2020 Annual Cash Incentive – Structure, Goals and Payout Decision

Structure. Neither Mr. Spencer nor Mr. Novack carried individual goals separate from the Company’s

corporate objectives for 2020. We believe that this aligned their incentive compensation fully with the completion
of corporate goals that measure business performance and are intended to drive long term stockholder value. For
our other NEOs, their annual cash incentive payout is typically based on the achievement of pre-established
corporate and individual goals. Our Chief Executive Officer typically recommends individual goals for each of
the other NEOs, which are aligned with our business strategy and linked with corporate goals, and our
Compensation Committee approves these goals. The individual goals for the NEOs are in addition to the general
responsibilities each officer has for managing his respective functional or operational area. For 2020, Mr. Ostrach
and Dr. Janssen’s respective annual cash incentive payouts were based on a weighting of 80% corporate and 20%
individual goals.

2020 Corporate Goals. Heading into 2020, our focus was balanced between advancing HEPLISAV-B as a
leading hepatitis-B vaccine in the U.S. and working toward a favorable policy recommendation from the ACIP,
as well as furthering our efforts to obtain marketing authorization of HEPLISAV-B from the European
Commission and plan for commercialization of the vaccine in Europe, and prioritizing our vaccine business
including developing new potential applications of CpG 1018 and beginning to build a pipeline of potential
product candidates. In early 2020, the Compensation Committee established corporate and, for NEOs other than
Messrs. Spencer and Novack, individual goals to align NEO annual cash incentive compensation with respective
performance toward these goals.

Accordingly, our corporate goals were focused on increasing HEPLISAV-B product revenue, improving

manufacturing yields, completing our post-marketing safety study for HEPLISAV-B, obtaining European
marketing authorization, preparing to launch European marketing activities directly or with a partner, starting to
develop a pipeline of potential vaccine candidates, entering collaborations with other vaccine developers to use
CpG 1018 in their product candidates, strengthening our balance sheet and financial position, and executing upon
our business plan which included maintaining specified cash and equivalents on hand at year end and controlling
cash usage to stay within the approved budget.

At the time these goals were set, the COVID-19 pandemic was in its infancy, the U.S. had just detected its

first case of COVID-19 on U.S. soil, and we had little appreciation for the magnitude of the global impact the
pandemic would have on our business in particular, and on the rest of the world in general. With respect to adult
vaccines, during the first half of 2020, we operated in an environment that was hyper-focused on personal
isolation and COVID-19 treatment and prevention. Closures and other safeguards made it nearly impossible to
proceed with business-as-usual. While adult vaccine utilization was down across the board in 2020, we began to
recognize opportunities to collaborate with vaccine developers working on COVID-19 vaccines. We recognized
an opportunity to supply them with our CpG 1018 adjuvant, which could create an additional revenue stream to
help offset reductions in HEPLISAV utilization.

During the year, we continued to monitor the impact of the COVID-19 pandemic on our business, including

the impact of COVID-19 on the United States generally, and on adult vaccine utilization in particular. We also
evaluated the related effects on the Company’s ability to sell HEPLISAV-B during the pandemic. Two key trends
emerged: (1) our buyers were initially inaccessible due to shelter-in-place orders and other COVID-19
precautions, and (2) even if distancing orders were relaxed at times, patients were not visiting hospitals to
receive hepatitis vaccines. This was a trend that affected not just HEPLISAV-B utilization, but all adult vaccines.
Recognizing the severe challenge that COVID-19 presented, the Compensation Committee revised the
Company’s HEPLISAV-B revenue goal downward in August of 2020. This allowed management to focus its
attention on objectives that were realistic and achievable in the face of unprecedented pandemic. It also allowed
management the room necessary to pivot toward the opportunities that COVID-19 uniquely provided for our
business, but were unforeseen when the original goals were set.

Other than the HEPLISAV-B revenue goal, no other corporate or individual goal was changed. The

HEPLISAV-B net sales goal was a corporate goal, and the change did not provide any special benefit to NEOs in
particular. We did not have any layoffs or salary reductions during 2020 that affected our broader employee base.
All employees in the Company shared the same corporate goals and had the same corporate achievement factor
applied to their bonuses.

28

As a result of this shift in focus, we were able to increase our number of CpG 1018 collaboration
agreements far in excess of our original goal of two, and in September 2020, we entered into a commercial
supply agreement with one of our collaborators, Valneva, to supply them with CpG 1018. Under this agreement
we could sell CpG 1018 sufficient to produce as many as 60 to 100 million doses of Valneva’s vaccine in 2021,
and up to an additional 90 million doses through 2024. We believe the work done last year to focus on
establishing additional collaborations could yield even more revenue-producing commercial supply agreements.

Because we are a fully-integrated biopharmaceutical company with a marketed product and ongoing vaccine

development program, our corporate goals were directly aligned with specific strategic objectives with an eye
toward matters that management could actually influence or control: Plan to advance our HEPLISAV-B U.S.
sales, work to ensure long-term growth of HEPLISAV-B sales in the U.S., drive long-term growth of our vaccine
business including through adjuvant collaborations, and to strengthen our financial position and organization.
These are all programs that we continue to believe will create long-term value for stockholders.

In February 2021, the Compensation Committee evaluated the accomplishments and performance of the
Company against these pre-established corporate goals, including the revised HEPSLIAV-B net sales goal. With
respect to each of the categories of corporate goals below, the Committee took into consideration each of the
goals identified and the level of completion in making an overall determination of goal achievement for each
category. After its consideration of the Company’s performance, as more specifically described in the following
chart, the Compensation Committee rated our overall 2020 corporate achievement at 111%.

Corporate Goal

Advance HEPLISAV-B Sales

Weight
50%

• Achieve 25% market share in field

targeted accounts.

• Achieve $28-30 million in

HEPLISAV-B full-year net sales.

• Convert at least one national

account with >15,000 dose historical
annual opportunity.

Ensure long-term growth of

20%

HEPLISAV-B sales in the U.S.
• Stay on track to achieve policy

goals for 2021.

• Complete HBV-24 enrollment.
• Achieve 25% increase in HBsAg

manufacturing yield.

Corporate
Achievement
Percentage
106.5%

106.7%

Corporate Achievement
The Compensation Committee
determined that we achieved the goals
in this category at an overall percentage
of 106.5%. In determining this
percentage, the Compensation
Committee considered several factors,
including:

•

26% market share achieved,
versus 20% one year prior.
• HEPLISAV-B net sales of

$36.0 million despite overall
reduced vaccine utilization.

• Converted two national accounts.

The Compensation Committee
determined that we achieved the goal in
this category at an overall percentage
of 106.7%. In determining this
percentage, the Compensation
Committee considered several factors,
including:

• Efforts have kept us on track for
positive policy recommendation
from ACIP.

• HBV-24 enrollment completed on

time.

• Exceeded goal by increasing yield

nearly 60% over baseline.

29

Corporate Goal

Vaccine Business

Weight
20%

• Develop ex-U.S. supply

strategy.

• Respond to EMA review to

support European approval by
Q1 2021.

• Execute Pertussis development

plan.

• Enter into at least two
additional in-house
development programs, external
collaborations for CpG 1018,
development partnerships or
acquisitions.

Corporate
Achievement
Percentage
127%

Corporate Achievement
The Compensation Committee
determined that we achieved the goal in
this category at an overall percentage
of 127%. In determining this
percentage, the Compensation
Committee considered several factors,
including:

• Ex-US supply strategy goals

met by successfully addressing
identified business continuity
risks, compliance and capacity
requirements. Phased approach
provides cost savings while
maintaining flexibility in
execution.

• Exceeded EMA goals, received
CHMP positive opinion in Q4,
tracked to the most aggressive
timeline and managed a
favorable outcome in European
label negotiations.

• Pertussis development plan
made significant progress
ahead of schedule and
continues on an appropriate
track.

• Exceeded collaborations goal

by entering into collaborations
far in excess of our goal, which
yielded 6 human clinical trials
started so far, produced the
Valneva commercial supply
agreement and resulted in our
first CpG 1018 revenue.

Financial

10%

• End 2020 with specified cash
and equivalents based on
approved plan.

• Develop debt refinancing

•

strategy.
Increase organizational strength
and capabilities through
implementation of employee
development, education, and
communication programs to
strengthen the connection and
alignment to our objectives and
to our vision leading to an
increase in pride and ownership
in our company and our results.

111%

The Compensation Committee
determined that we achieved the goal in
this category at an overall percentage
of 111%. In determining this
percentage, the Compensation
Committee considered several factors,
including:

• Cash and equivalents exceeded

the goal significantly.
• Evaluated multiple debt
refinancing options and
established a strategy for
refinancing, while continuing to
watch market dynamics.
• Exceeded organizational goal
by implementing multiple

30

Corporate Goal

Weight

Corporate Achievement

Corporate
Achievement
Percentage

programs regarding employee
recognition, leadership training,
wellness, communications,
employee development and
training initiatives.

Total

100%

111%

2020 Individual Goals. As described above, Messrs. Spencer and Novack did not have individual goals and

their respective incentive compensation was based solely on achievement of our corporate goals.

At the beginning of each year, our Chief Executive Officer typically recommends individual goals for each

the remaining NEOs, which are aligned with our business strategy and linked with corporate goals, and our
Compensation Committee approves these goals. The individual goals for our NEOs include critical
responsibilities that each NEO has that go beyond the corporate goals and are significant to our success.
Established in February 2020, the 2020 individual goals for the NEOs named below focused on objectives linked
to their functional expertise and responsibility as well as our then-current business strategy. These specific goals
were in addition to the general responsibilities each NEO had for managing his respective functional operational
area, including through the period of significant change as we adapted to the pandemic by moving to a nearly
fully remote workforce.

Our Compensation Committee, in recognition of the fact that 80% of the incentive payout for each NEO

named in the table below is based on corporate goal achievement, believes it is also of importance to assess the
individual achievement portion of the goal grading in a manner that is reflective of performance against the
individual goals. Thus, as is the case with respect to the 2020 individual goals, there will be circumstances where
the individual goal grading exceeds the corporate goal grading, and there will be instances where the corporate
goal grading will surpass the individual goal grading. In early 2021, based on the recommendation of
Mr. Spencer, as well as the observations by Compensation Committee members of these officers and its own
assessment of each NEO’s effectiveness, the Compensation Committee determined the level of achievement of
each NEO’s 2020 individual goals as follows:

Name

Michael S.
Ostrach

Finance:

Individual Goals

Individual Achievement

Individual
Achievement
Percentage

105%

Met all goals, and exceeded
goals for the year, as
follows:

• Acted as a key

contributor to our I/O
divestiture efforts.

• Acted as a key

contributor to our
coronavirus
collaborations.
• Managed net use of

cash within approved
operating budget with
ending cash level
above target.

• End 2020 with specified operating
capital based on approved plan.
• Develop debt refinancing strategy.
• Control net cash usage within budget.
• Determine whether to, and if necessary,
implement, financial system upgrade or
replacement strategy.

• Add at least one additional sell side
analyst, preferably bulge bracket.
Investor Relations:

• Develop patent strategies for specified
programs; file apps as appropriate.
• Reduce non-vaccine IP portfolio to
minimum necessary to support
outboarding.

• Complete existing oncology

opportunities.

31

Name

Individual Goals

Individual Achievement

Robert
Janssen, M.D.

Advance HEPLISAV Clinical Studies and
Regulatory Filings

Met all goals, and exceeded
goals for the year, as
follows:

Individual
Achievement
Percentage

105%

• Acted as a key

technical contributor
in coronavirus
collaborations
• Drove ongoing
Kaiser study
• Acted as key
contributor in
connection with our
EU approval of
HEPLISAV-B
achieved on most
aggressive timeline.

• On track to achieve ACIP favorable
policy recommendation in 2021:

− Provide 2 significant data updates

to the working group.

− Write manuscript for effective

seroprotection rates.

− Establish scientific data package to

support preferential
recommendation.

• HBV-24: Complete enrollment
− Draft manuscript for 1Q21

submission

• HBV-26: complete interim analysis

and submit to FDA

• Respond to EMA review to support

approval by Q1 2021

• Submit Safety of CpG manuscript

Advance HEPLISAV Medical Affairs
Plan

• Create policy plan to facilitate ACIP
decision-making for universal adult
hepatitis-B vaccination.
• Submit CEA manuscript.
• Approve at least two new ISRs

consistent in priority areas of interest.

• Engage and enlist three prioritized
medical societies to recognize
HEPLISAV-B.
Advance Vaccine Pipeline:

• Execute Pertussis development plan.
• Complete phase-1 enabling animal

studies for Pertussis

• FPI phase 1 Pertussis trial on track
for Q1 2021 start (subject to animal
study results).

• Enter into either one additional

in-house development program, one
external collaboration for 1018, or
one strategic development partnership
or acquisition.

• Support vaccine business development

through scientific review of
opportunities and engagement of key
stakeholders.
Oncology

• Close out MEL-01.
• Complete I-SPY2 trial.

After making these determinations regarding levels of corporate and individual performance achieved against the
pre-established performance goals, the Compensation Committee (and the Board with respect to Mr. Spencer)

32

reviewed and approved the annual cash incentive payouts noted below. As noted above, for the NEOs other than
Messrs. Spencer and Novack, the cash incentive payouts were based 80% on achievement of corporate goals and 20%
on individual performance. Other than increases made in connection with the promotions of Messrs. Spencer and
Novack, which were each effective January 1, 2020 and described above, there were no other changes to the NEOs’
target annual cash incentive percentages between 2019 and 2020.

2020 Actual Annual Cash Incentive Paid

2020 Target Annual Cash
Incentive

Achievement of Corporate
Goals

Achievement of Individual
Goals

% of Base
Salary
60%

55%

50%

50%

$(1)
$309,000

$272,250

$232,199

$233,465

% of Target
Annual Cash
Incentive
111%

111%

111%

111%

$(1)

NA

NA

$206,192

$207,316

% of Target
Annual Cash
Incentive
NA

NA

105%

105%

$(1)

NA

NA

$48,762

$49,028

Total(1)
$342,990

$302,198

$254,955

$256,345

Name
Ryan Spencer(2)
David F. Novack(2)
Michael S. Ostrach(3)
Robert Janssen, M.D.

(1) Amounts are rounded to nearest dollar.

(2) Messrs. Spencer and Novack did not have separate individual goals, only corporate goals.

(3) Notwithstanding the announcement of Mr. Ostrach’s planned retirement, Mr. Ostrach remained continuously employed with us through

the determination date and was therefore eligible to receive his annual incentive award.

Long-Term Equity Incentive Awards

In making annual long-term equity incentive awards to our NEOs in early 2020, the Compensation
Committee considered each NEO’s total options outstanding as of December 31, 2019, his performance during
2019, the potential amount that could be realized at different hypothetical stock prices upon exercise of those
awards and each NEO’s percentage of ownership of the Company. The Compensation Committee also reviewed
market and peer group data reference points (including the 10th, 25th, 50th, 60th, 75th and 90th percentiles of
market and peer group data) with respect to an approximation of grant date fair value and shares as a percentage
of total common shares outstanding. Additionally, the Compensation Committee considered the mix of stock
options and RSUs granted in 2019. The Compensation Committee made final determinations based on its
judgment in accordance with our pay-for-performance philosophy and the need to retain and motivate these
highly experienced and essential members of our management team.

For 2020, the Compensation Committee (and the Board, with respect to Mr. Spencer) determined to grant

each NEO’s annual long-term incentive compensation with a mix of time-based stock options and
performance-based RSUs. The Compensation Committee’s determination to grant stock options and RSUs to
each NEO in 2020 was partially based upon the Compensation Committee’s grant of both time-and
performance-based stock options in 2019 as part of each NEO’s annual long-term incentive compensation. As a
result, the Compensation Committee determined that a mix of time-based stock options and performance-based
RSUs was most appropriate for 2020 grants.

In February 2020, the Compensation Committee approved annual equity grants for the NEOs in the form of

stock options and performance-based RSUs, with stock options representing 75% of the aggregate target award
value and performance-based RSUs representing the remaining 25% of the aggregate target award value. The
time-based stock options vest over three years, with one-third of the shares vesting on February 1, 2021 and the
remainder vesting in equal monthly installments thereafter, subject to the NEO’s continuous service with us
through the vesting date.

The performance-based RSUs vest solely upon the Compensation Committee’s certification of achievement
of performance goals relating to advancement of HEPLISAV-B. Our view is that these goals were appropriately
difficult to achieve in the prescribed performance period and required the NEOs to stretch well beyond the
Company’s natural trajectory to achieve them. The goals were:

•

•

Achieve HEPLISAV-B net sales target of a specified dollar amount in a quarter prior to the end of
2022 (75%); and

Support efforts with respect to a favorable ACIP policy recommendation for HEPLISAV-B prior to the
end of 2022 (25%).

33

The table below describes the aggregate grant date fair value of these stock options and RSUs granted in
fiscal year 2020. We made these grants based on share guidelines. To the extent the values in the table below
appear lower than in prior years, that is a function of the stock price on the date of grant, rather than a reflection
of the NEO’s perceived performance or value.

Name
Ryan Spencer
David F. Novack
Michael S. Ostrach
Robert Janssen, M.D.

Other Executive Compensation Matters

Equity Compensation Policies

Grant Date Fair Value
of February 2020
Time-Based Stock
Option Awards
$455,338
$523,742
$381,896
$381,896

Grant Date Fair Value
of February 2020
Performance-Based
RSU Awards
$206,451
$189,700
$135,500
$135,500

Our Compensation Committee approves equity awards for NEOs and authorizes the Chief Executive Officer

to approve equity awards for all other employees based on approved pools for annual and new hire grants.
Awards for senior vice president and above are approved either at a regularly-scheduled meeting of the
Compensation Committee or by unanimous written consent. The effective date of the grant is generally the date
of the meeting, or the date the last person executes the unanimous written consent.

The exercise price of stock options is not less than the closing price of our common stock on the Nasdaq
Capital Market on the grant date of the stock option. We have no practice of timing grants of stock options or
restricted stock awards to coordinate with the release of material non-public information, and we have not timed
the release of material non-public information for purposes of affecting the value of the compensation awarded to
our NEOs or any other employee.

We encourage our NEOs to hold a significant equity interest in our Company, but we have not set specific

stock ownership guidelines.

Compensation Recovery Policy

Amounts paid and awards granted under our equity plans will be subject to recoupment in accordance with
the Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable regulations under the Act,
any clawback policy the Company adopts or as is required by applicable law. In addition, as a public company
subject to the provisions of Section 304 of the Sarbanes-Oxley Act of 2002, if we are required as a result of
misconduct to restate our financial results due to our material noncompliance with any financial reporting
requirements under the federal securities laws, our chief executive officer and chief financial officer may be
legally required to reimburse us for any bonus or other incentive-based or equity-based compensation they
receive. In addition, we will comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer
Protection Act once the SEC final regulations on the subject become effective.

Compensation Risk Analysis

During fiscal 2020, our Compensation Committee reviewed our compensation policies as generally

applicable to our employees in order to determine whether any such programs were likely to present a material
risk to the Company. As part of its assessment, the Compensation Committee considered, among other things, the
allocation of compensation among base salary and short- and long-term compensation, our approach to
establishing Company-wide and individual financial, operational and other performance targets, and the nature of
our key performance metrics. As a result of this review and analysis, the Compensation Committee’s determined
that our policies and programs do not encourage excessive or inappropriate risk taking, and that the level of risk
that they do encourage is not reasonably likely to have a material adverse effect on the Company.

34

Report of the Compensation Committee of the Board of Directors on Executive Compensation

In early 2021, the Compensation Committee discussed with management the Compensation Discussion and
Analysis, contained in this proxy statement. Based on this review and discussion, the Compensation Committee
has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy
statement and incorporated into our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The material in this report is not ‘‘soliciting material,’’ is furnished to, but not deemed ‘‘filed’’ with, the SEC

and is not deemed to be incorporated by reference in any filing of the Company under the Securities Act or the
Exchange Act, other than the Company’s Annual Report on Form 10-K, where it shall be deemed to be
‘‘furnished,’’ whether made before or after the date hereof and irrespective of any general incorporation
language in any such filing.

Ms. Peggy V. Phillips, Chairperson
Mr. Natale Ricciardi
Dr. Daniel Kisner, M.D.

35

The following table sets forth all of the compensation awarded to, or earned by, our NEOs during the fiscal

years ended December 31, 2020, 2019 and 2018.

SUMMARY COMPENSATION TABLE

Name and Principal Position
Ryan Spencer

Chief Executive
Officer and Director

David F. Novack

President and Chief Operating
Officer

Michael S. Ostrach

Former Senior Vice President, Chief
Financial Officer and
Chief Business Officer

Robert Janssen, M.D.

Senior Vice President and Chief
Medical Officer

Salary

Stock
Awards(1)

Option
Awards(2)
Year
2020 $515,000 $206,451 $ 455,338
2019 $391,212 $654,375 $1,957,520

Non-Equity
Incentive
Compensation(3)
$342,990
$152,375

All Other
Compensation(4)
$2,000
$2,000

2020 $495,000 $189,700 $ 523,742
2019 $465,886 $272,220 $1,701,362
— $1,083,000
2018 $401,700 $
2020 $464,398 $135,500 $ 381,896
2019 $450,872 $230,340 $ 611,433
— $2,904,000
2018 $439,875 $

2020 $466,930 $135,500 $ 381,896
2019 $453,330 $272,220 $ 722,602
— $1,083,000
2018 $438,000 $

$302,198
$229,382
$210,892
$254,955
$209,665
$216,639

$256,345
$210,798
$216,810

$2,000
$2,000
$2,000
$2,000
$2,000
$2,000

$2,000
$2,000
$2,000

Total
$1,521,779
$3,157,482

$1,512,640
$2,670,850
$1,697,592
$1,238,749
$1,504,310
$3,562,514

$1,242,671
$1,660,950
$1,739,810

(1)

(2)

(3)

Represents the aggregate grant date fair value of RSUs granted in the fiscal year in accordance with ASC 718. See note 15 of our
‘‘Notes to Consolidated Financial Statements’’ in our annual report on Form 10-K filed with the SEC on February 25, 2021 for a
discussion of assumptions we made in determining the compensation costs included in this column. With regard to awards with
performance-based vesting, the grant date fair value assumes the highest level of achievement had been met. For further discussion of
these performance-based RSUs, see the section entitled ‘‘Compensation Discussion and Analysis – 2020 Executive Compensation
Decisions – Long-Term Equity Incentive Awards.’’

Represents the aggregate grant date fair value of option awards granted in the fiscal year in accordance with ASC 718. See note 15 of
our ‘‘Notes to Consolidated Financial Statements’’ in our annual report on Form 10-K filed with the SEC on February 25, 2021 for a
discussion of assumptions we made in determining the compensation costs included in this column.

Represents the annual cash incentive bonuses earned pursuant to our annual cash incentive bonus plan for services rendered in the
fiscal year. For further discussion see the section entitled ‘‘Compensation Discussion and Analysis – 2020 Executive Compensation
Decisions – 2020 Annual Incentive Program – Structure, Goals and Payout Decision.’’

(4)

Represents $2,000 401(k) matching contribution for each NEO made by the Company in the fiscal year.

36

The following table shows certain information regarding grants of plan-based awards to our NEOs during

the fiscal year ended December 31, 2020.

GRANTS OF PLAN BASED AWARDS

Estimated
Future
Payouts
Under
Non-Equity
Incentive
Plan
Awards
Target(1)
($)

Estimated
Future
Payouts
Under
Equity
Incentive
Plan
Awards
Target(2)
(#)

Date of Board
or
Compensation
Committee
Action to Grant
Award

— $309,000

2/13/2020
2/13/2020

— $272,250

2/12/2020
2/12/2020

— $232,199

2/12/2020
2/12/2020

— $233,465

2/12/2020
2/12/2020

—
—
39,550
—
—
35,000
—
—
25,000
—
—
25,000

All Other
Stock
Awards:
Number of
Shares of
Stock
or Units
(#)
—
—
—
—
—
—
—
—
—
—
—
—

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

—
130,000
—
—
144,000
—
—
105,000
—
—
105,000
—

Exercise
or Base
Price of
Option
Awards
($/Share)
—
$5.22

Grant Date
Fair Value
of RSU and
Option
Awards(3) ($)
—
$455,338
— $206,451
—
—
$523,742
$5.42
— $189,700
—
—
$381,896
$5.42
— $135,500
—
—
$381,896
$5.42
— $135,500

Grant Date
—
2/13/2020
2/13/2020
—
2/12/2020
2/12/2020
—
2/12/2020
2/12/2020
—
2/12/2020
2/12/2020

Name
Ryan Spencer

David F. Novack

Michael S. Ostrach

Robert Janssen, M.D.

(1)

(2)

(3)

Represents the target cash incentive award in fiscal year 2020 as further described under ‘‘Compensation Discussion and Analysis –
Elements of Executive Compensation’’; our annual cash incentive program does not specify minimum or maximum levels.

Represents the number of PSUs granted in the fiscal year that are subject to performance-based vesting, as described in the
‘‘Compensation Discussion and Analysis.’’

Represents the aggregate grant date fair value of options granted in fiscal year 2020 in accordance with ASC 718. See Note 15 of our
‘‘Notes to Consolidated Financial Statements’’ in our annual report on Form 10-K filed with the SEC on February 25, 2021 for a
discussion of the assumptions we made in determining the compensation costs included in this column. With regard to awards with
performance-based vesting, the grant date fair value assumes the highest level of achievement had been met, as reported in the
‘‘Summary Compensation Table.’’ For further discussion of these performance-based RSUs, see the section entitled ‘‘Compensation
Discussion and Analysis – 2020 Executive Compensation Decisions – Long-Term Equity Incentive Awards.’’

NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN
BASED AWARDS TABLE

The material terms of NEO annual compensation and the explanations of the amounts of base salary, annual

cash-based incentives, and equity-based awards in proportion to total compensation are described under
‘‘Compensation Discussion and Analysis’’ in this proxy statement. Our severance and change in control benefits
are described under ‘‘Summary of Change in Control and Involuntary Termination Arrangements’’ in this proxy
statement.

As discussed in the ‘‘Compensation Discussion and Analysis,’’ the fiscal year 2020 cash incentive amounts

were paid pursuant to the annual cash incentive compensation program, based on the achievement of certain
corporate and individual goals. Equity-based awards were granted in 2020 under our 2018 Plan and represent a
mix of time-based and performance-based options, as described in the ‘‘Compensation Discussion and Analysis.’’

37

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table shows certain information regarding outstanding equity awards for NEOs as of

December 31, 2020.

Option Awards

Stock Awards

Name

Ryan Spencer

David F. Novack

Michael S. Ostrach

Robert Janssen, M.D.

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)

Option
Exercise
Price
($)

Vesting
Commencement
Date

Option
Expiration
Date

Number of
Shares or
Units that
Have Not
Vested (#)

Market
Value
of Stock
that
Have Not
Vested ($)(1)

Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares or
Other
Rights
that Have
Not
Vested (#)

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares or
Other
Rights that
Have Not
Vested ($)

(7)

(2)

(2)

(3)

(5)

(2)

(2)

(2)

(2)

(2)

(2)

4,500
4,500
2,000
5,250
3,500
9,500
2,000
52,888
25,000
(2) 133,332
(6)
—
—
—
30,000
22,000
75,000
64,000
75,555
18,000
63,555
12,500
66,666
—
—
25,000
18,000
20,000
27,000
67,000
29,000
84,000
71,695
18,000
75,000
53,778
—
—
2,250
2,500
15,000
18,000
56,000
80,000
75,555
18,000
63,555
—
—

(3)

(2)

(2)

(5)

(3)

(2)

(5)

(2)

(4)

(2)

(2)

—
—
—
—
—
—
—
3,112
25,000
266,668
—
130,000
—
—
—
—
—
4,445
—
40,445
12,500
133,334
144,000
—
—
—
—
—
—
—
—
8,305
—
75,000
34,222
105,000
—
—
—
—
—
—
—
4,445
—
40,445
105,000
—

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

$31.40
$36.80
$42.60
$30.60
$16.70
$16.00
$30.49
$16.45
$ 3.81
$ 6.80
—
$ 5.22
—
$21.40
$17.10
$16.00
$21.99
$16.45
$16.45
$10.47
$ 3.81
$ 6.80
$ 5.42
—
$31.40
$34.80
$30.80
$17.10
$16.00
$28.45
$21.99
$16.45
$16.45
$18.40
$10.47
$ 5.42
—
$31.40
$36.80
$41.40
$17.10
$16.00
$21.99
$16.45
$16.45
$10.47
$ 5.42
—

1/5/2021
1/31/2022
10/21/2022
2/5/2023
2/5/2024
2/8/2025
9/9/2025
1/31/2025
6/13/2026
12/15/2026

— 41,666

$185,414

1/6/2011
2/1/2012
10/22/2012
2/6/2013
2/6/2014
2/9/2015
9/10/2015
2/1/2018
6/14/2019
12/16/2019
—
2/13/2020
—
3/25/2013
2/4/2014
2/9/2015
2/4/2016
2/1/2018

2/22/2019
6/14/2019
12/16/2019
2/12/2020
—
1/6/2011
1/31/2012
2/5/2013
2/4/2014
2/9/2015
8/27/2015
2/4/2016
2/1/2018

3/21/2018
2/22/2019
2/12/2020
—
1/6/2011
2/1/2012
10/31/2012
2/4/2014
2/9/2015
2/4/2016
2/1/2018

2/22/2019
2/12/2020
—

2/12/2027
—
3/24/2023
2/3/2024
2/8/2025
2/3/2023
1/31/2025
— 1/31/2025
2/21/2026
6/13/2026
12/15/2026
2/11/2027
—
1/5/2021
1/30/2022
2/4/2023
2/3/2024
2/8/2025
8/26/2025
2/3/2023
1/31/2025
— 1/31/2025
3/20/2025
2/21/2026
2/11/2027
—
1/5/2021
1/31/2022
10/30/2022
2/3/2024
2/8/2025
2/3/2023
1/31/2025
— 1/31/2025
2/21/2026
2/11/2027
—

39,550

$175,998

35,000

$155,750

25,000

$111,250

25,000

$111,250

(1)

Represents the aggregate fair value of RSUs based on the last closing price per share as of December 31, 2020 of $4.45.

38

(2) Options vest at the rate of 1/3rd of the shares on the first anniversary of the vesting commencement date, with 1/36th of the total

number of shares vesting each month thereafter.

(3) Options fully vested upon achievement of performance goals.

(4) Options vest 50% on March 21, 2020 and the remainder will vest on March 21, 2021.

(5)

(6)

This RSU was granted on February 12, 2020 and are subject to performance-based vesting.

This RSU was granted on February 22, 2019 prior to Mr. Spencer becoming an NEO. The RSU vests over three years with one-third
vesting on each annual anniversary date.

(7)

This RSU was granted on February 13, 2020 and are subject to performance-based vesting.

OPTION EXERCISES AND STOCK VESTED

The following table provides information on stock awards that vested, including the number of shares
acquired upon vesting and the value realized, determined as described below, for the named executive officers in
the fiscal year ended December 31, 2020.

Option Awards

Stock Awards

Number of Shares
Acquired on
Exercise (#)
—
—
—
—
The value realized on vesting is determined by multiplying the number of shares of stock by the market value of the underlying shares
as reported by the Nasdaq Capital Market on the vesting date.

Number of Shares
Acquired on
Vesting (#)
33,646
79,763
80,304
81,375

Name
Ryan Spencer
David F. Novack
Michael S. Ostrach
Robert Janssen, M.D.
(1)

Value Realized
on Exercise
($)
—
—
—
—

Value Realized
on Vesting
($)(1)
$ 89,498
$323,517
$213,609
$216,458

PENSION BENEFITS

None of the NEOs participates in or has an account balance under any pension or qualified or non-qualified

defined benefit retirement plan sponsored by the Company.

NON -QUALIFIED DEFERRED COMPENSATION

None of the NEOs participates in or has an account balance under any non-qualified defined contribution

plan or other non-qualified deferred compensation plan maintained by the Company.

39

POTENTIAL PAYMENTS UPON CHANGE IN CONTROL OR INVOLUNTARY TERMINATION

Summary of Change in Control and Involuntary Termination Arrangements.

To promote retention of certain key executives, our Board has authorized the Company to enter into MCSAs

with each NEO. We refer to such agreements in effect as of December 31, 2020 as the ‘‘Management
Agreements.’’ In order to be eligible to receive benefits under the Management Agreements, our NEOs and other
officers must execute a general waiver and release of claims, and such release must become effective in
accordance with its terms.

Change in Control.

NEOs do not receive an equity acceleration benefit in the event of a change in control (unless there is

termination of employment without cause or for good reason) of the Company, as described below.

Qualifying Termination in Connection with a Change in Control.

Under the Management Agreements, if, on or during the two-year period following a change in control (as

described below), the NEO’s employment is involuntarily terminated, the NEO will, subject to the execution of a
release of claims, be entitled to receive:

•

•

•

•

•

a lump-sum cash payment equal to a specified number of months (21 months for Mr. Spencer,
18 months for Mr. Novack, and 15 months for our other NEOs) of the executive’s then-effective annual
base salary;

a lump-sum cash payment equal to a specified percentage of the NEO’s target annual variable cash
compensation (175% of such target for Mr. Spencer, 150% for Mr. Novack, and 125% of such target
for our other NEOs) for the year of termination;

cash payments equal to the value of the applicable COBRA premiums for up to the same number of
months as the NEO receives in base salary, payable in a single lump sum, as set forth in the first bullet
(the ‘‘COBRA Payment’’);

acceleration of vesting of all outstanding equity awards at the time of such termination; and

the extension of exercisability of all stock options to purchase the Company’s common stock for a
period of 3 years following termination of employment (but in any event not beyond each option’s
expiration date).

In accordance with his Restated Management Agreement defined below, in the event of an involuntary

termination prior to March 31, 2021 following a change in control, Mr. Ostrach’s entitlement to COBRA
Payment will increase from 15 to 18 months.

In addition, if any payments or benefits would constitute a ‘‘parachute payment’’ within the meaning of
Section 280G of the Code and such payments would be subject to the excise tax imposed by Section 4999 of the
Code, then such payments will either be (1) provided to the NEO in full or (2) reduced to such lesser amount
that would result in no portion of such payments being subject to the excise tax, whichever amount after taking
into account all applicable taxes, including the excise tax, would result in the NEO’s receipt, on an after-tax
basis, of the greatest amount of such payments.

The Management Agreements generally define a change in control to mean the occurrence of a change in
the majority ownership of the voting securities of the Company; a merger that results in change in the majority
ownership of the voting securities of the Company; the sale of all or substantially all of the assets; or over a
period of 12 months or less, when a majority of our Board becomes comprised of individuals who were not
serving on our Board as of a specified date, or whose nomination, appointment, or election was not approved by
a majority of the directors who were serving on our Board as of such specified date.

40

The table below outlines the potential payments and benefits payable to each NEO in the event such
executive’s termination in connection with a Change in Control of the Company, assuming such event had
occurred on December 31, 2020.

Name
Ryan Spencer
David F. Novack
Michael S. Ostrach
Robert Janssen, M.D.
(1)

Severance
Payment
$1,442,000
$1,150,875
$ 870,746
$ 875,494

Continuation
of Benefits
$31,217
$41,356
$41,356
$27,597

Value of
Accelerated
Stock Awards(1)
$377,411
$163,750
$111,250
$111,250

Total
$1,850,628
$1,355,981
$1,023,352
$1,014,341

Represents the value of accelerated vesting of equity awards if the event took place on December 31, 2020. The value for RSUs is
calculated based on the closing price per share on December 31, 2020. The value for stock option awards is calculated based on the
‘‘spread’’ between the closing price per share on December 31, 2020 of $4.45 and the exercise price of the vested awards, to the extent
such vested awards were ‘‘in the money.’’

Involuntary Termination.

Under the terms of the Management Agreements, upon an ‘‘involuntary’’ termination without ‘‘cause’’ or, if
applicable, upon a resignation for ‘‘good reason’’ (as defined below), the NEO will, subject to the execution of a
release of claims, be entitled to receive:

•

•

•

a lump-sum cash payment equal to the specified number of months (ranging from 12 to 21) of the
executive’s then-effective annual base salary;

the COBRA Payment; and

for Messrs. Spencer and Novack, the extension of exercisability of all vested stock options to purchase
the Company’s common stock for a period of 18 months, and 15 months, respectively (and 12 months
for all other NEOs) following termination of employment (but in any event not beyond each option’s
expiration date).

For purposes of the Management Agreements, ‘‘cause’’ generally means (1) gross negligence or willful
misconduct in the performance of duties to the Company, where such gross negligence or willful misconduct has
resulted or is likely to result in substantial and material damage to the Company or its subsidiaries; (2) repeated
unexplained or unjustified absence from the Company; (3) a material and willful violation of any federal or state
law; (4) commission of any act of fraud with respect to the Company; or (5) conviction of a felony or a crime
involving moral turpitude causing material harm to the standing and reputation of the Company, in each case as
determined in good faith by the Board.

For purposes of the Management Agreements, ‘‘good reason’’ generally means the NEO’s voluntary
termination following (1) a material reduction or change in job duties, responsibilities, and requirements
inconsistent with the NEO’s position with the Company and his or her prior duties, responsibilities, and
requirements, or a material change in the level of management to which the NEO reports; (2) any material
reduction of base compensation (other than in connection with a general decrease in base salaries for most
officers of the successor corporation); or (3) the refusal to relocate to a facility or location more than 35 miles
from the Company’s current location. The NEO must provide 90 days’ notice of the event giving rise to good
reason, give the Company 30 days’ to cure (if curable), and any resignation for good reason must occur within
180 days after the occurrence of the event giving rise to such resignation right.

In addition, in September 2020, the Company and Mr. Ostrach entered into an amended and restated

management continuity and separation agreement (the ‘‘Restated Management Agreement’’), which in addition to
the above benefits, also provides that in the event of an involuntary termination prior to March 31, 2021 that
does not occur in connection with a change in control, Mr. Ostrach will receive, in addition to a cash severance
benefit equal to twelve months of his annual base salary, 100% of his bonus for 2020 (the ‘‘Actual Bonus’’).
Mr. Ostrach’s entitlement to COBRA Payment will increase from 12 to 18 months; and he will be eligible for an
additional six months of vesting on all time-based stock options outstanding at the time of his Retirement.

In the event of Mr. Ostrach’s retirement on or after March 31, 2021 but no later than December 31, 2021

(‘‘Retirement’’): Mr. Ostrach will receive (i) 12 months of his annual base salary and (ii) the Actual Bonus.
Mr. Ostrach will be entitled to 18 months of COBRA Payment. Mr. Ostrach will receive an additional six months

41

of vesting on all time-based stock options outstanding at the time of his Retirement; and the exercise period for
stock options held by Mr. Ostrach and that are outstanding and vested as of the date of Retirement will end upon
the earlier of (i) the date on which the original term of such stock options would otherwise expire and
(ii) 12 months following the date of his Retirement, unless the terms of the option agreement provide for a
longer period.

The table below outlines the potential payments and benefits payable to each NEO in the event of such
NEO’s involuntary termination not in connection with a change in control had occurred on December 31, 2020.

Name
Ryan Spencer
David F. Novack
Michael S. Ostrach
Robert Janssen, M.D.

Severance
Payment
$772,500
$618,750
$696,597
$466,930

Continuation
of Benefits
$26,757
$34,463
$41,356
$22,078

Value of
Accelerated
Stock Awards
$—
$—
$—
$—

Total
$799,257
$653,213
$737,953
$489,008

42

PAY RATIO DISCLOSURE

Under SEC rules, we are required periodically to calculate and disclose the annual total compensation of our

median employee, as well as the ratio of the annual total compensation of our median employee as compared to
the annual total compensation of our Chief Executive Officer (‘‘CEO Pay Ratio’’). To identify our median
employee, we used the following methodology:

•

•

•

•

To determine our total population of employees, we included all full-time, part-time, and temporary
employees as of December 31, 2020.

To identify our median employee from our employee population, we calculated the aggregate amount
of each employee’s 2020 base salary (using a reasonable estimate of the hours worked and overtime
actually paid during 2020 for hourly employees and actual salary paid for our remaining employees),
the actual value of annual cash incentive awards earned in 2020, and the value of equity awards
granted in 2020 using the same methodology we use for estimating the value of the equity awards
granted to our named executive officers and reported in our Summary Compensation Table.

In making this determination, we annualized the compensation elements listed above of employees who
were employed by us for less than the entire calendar year.

Compensation paid in foreign currencies was converted to U.S. dollars based on exchange rates in
effect on December 31, 2020.

Using this approach, we determined our median employee. Once the median employee was identified, we

then calculated the annual total compensation of this employee for 2020 in accordance with the requirements of
the Summary Compensation Table.

For 2020, the median of the annual total compensation of our employees (other than our Chief Executive

Officer) was $164,291 and the annual total compensation of our Chief Executive Officer, as reported in the
Summary Compensation Table included in this Proxy Statement, was $1,521,779. Based on this information, the
ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total
compensation of all employees was approximately 9-to-1.

The CEO Pay Ratio above represents our reasonable estimate calculated in a manner consistent with SEC
rules and applicable guidance. SEC rules and guidance provide significant flexibility in how companies identify
the median employee, and each company may use a different methodology and make different assumptions
particular to that company. As a result, and as explained by the SEC when it adopted these rules, in considering
the pay ratio disclosure, stockholders should keep in mind that the rule was not designed to facilitate
comparisons of pay ratios among different companies, even companies within the same industry, but rather to
allow stockholders to better understand and assess each particular company’s compensation practices and pay
ratio disclosures.

Neither the Compensation Committee nor our management used our CEO Pay Ratio measure in making

compensation decisions.

43

DIRECTOR COMPENSATION

NON-EMPLOYEE DIRECTOR COMPENSATION PHILOSOPHY

Our non-employee director compensation philosophy is based on the following guiding principles:

•

•

Aligning the long-term interests of stockholders and directors; and

Compensating directors appropriately and adequately for their time, effort and experience

The elements of director compensation consist of annual cash retainers and equity awards, as well as

customary and usual expense reimbursement in attending Board and committee meetings. In an effort to align the
long-term interests of our stockholders and non-employee directors, the mix of cash and equity compensation has
historically been, and is currently, weighted more heavily to equity.

The Compensation Committee recommends non-employee director compensation to the Board, and the full

Board reviews and approves or disapproves such compensation. When considering non-employee director
compensation decisions, the Compensation Committee believes it is important to be informed as to current
compensation practices of comparable publicly-held companies in the life sciences industry, especially to
understand the demand and competitiveness for attracting and retaining an individual with each non-employee
director’s specific expertise and experience. Thus, the Compensation Committee considers recommendations from
Arnosti Consulting, Inc. based on an analysis of peer group Board compensation. Our compensation
arrangements for our non-employee directors are set forth in our Non-Employee Director Compensation Policy
(the ‘‘Director Compensation Policy’’). The Director Compensation Policy outlines cash and equity compensation
automatically payable to non-employee members of the Board, unless such non-employee director declines
receipt of such cash or equity compensation by written notice to us. The Compensation Committee reviews our
non-employee director compensation relative to industry practices every year, and last amended it in November
of 2019. No changes were made to Director compensation in 2020.

Previously, our stockholders approved a limit on the amount of non-employee director compensation
permitted under our 2018 Equity Incentive Plan. The aggregate value of all cash and equity-based compensation
granted or paid by us to any individual for service as a non-employee director of the Board with respect to any
fiscal year of the Company may not exceed (i) a total of $200,000 with respect to any such cash compensation
and (ii) $800,000 in total value with respect to any such equity-based compensation (including awards granted
under our 2018 Equity Incentive Plan and any other equity-based awards), calculating the value of any such
awards based on the grant date fair value of such awards for financial reporting purposes. This limit was not
intended to serve as an increase in the annual amount of non-employee director compensation; rather, this action
was approved for the purpose of limiting the amount of compensation the Board can approve for non-employee
directors each year.

CASH COMPENSATION ARRANGEMENTS

During 2020, each member of our Board who was not an employee or officer of the Company received the

following cash compensation for Board services:

•

•

•

•

A $65,000 annual retainer for service as chairman of the Board or, alternatively, a $40,000 annual
retainer for service as a member of the Board.

A $20,000 annual retainer for the Chair of the Audit Committee and a $10,000 annual retainer for each
additional member of the Audit Committee.

A $15,000 annual retainer for the Chair of the Compensation Committee and a $7,000 annual retainer
for each additional member of the Compensation Committee.

A $10,000 annual retainer for the Chair of the Nominating and Corporate Governance Committee and
$5,000 annual retainer for each additional member of the Nominating and Corporate Governance
Committee.

Cash compensation is paid on a quarterly basis, in advance, except that for new appointments to (whether to

the Board or to a committee seat not previously held, the fees for that quarter are pro-rated based on the actual
number of days served during such quarter. We also reimburse our non-employee directors for their reasonable
expenses incurred in attending meetings of our Board and committees of our Board.

44

EQUITY AWARDS

During 2020, our compensation program for non-employee directors provided for the following equity

compensation for Board services:

•

•

Each new director automatically received an initial equity award (‘‘Initial Grant’’) consisting of a
non-qualified stock option to purchase 50,000 shares of our common stock upon the date each such
person is elected or appointed to the Board.

On the date of each annual meeting of the Company’s stockholders, each non-employee director also
automatically received a subsequent equity award (‘‘Subsequent Grant’’), consisting of a non-qualified
stock option to purchase 25,000 shares of Dynavax common stock. However, the non-employee
director’s first Subsequent Grant was reduced to –

○

○

○

75% of the Subsequent Grant, or 18,750 shares, if the service period from the non-employee
director’s initial election date to the annual meeting was between 7 and 10 months;

50% of the Subsequent Grant, or 12,500 shares, if the service period from the non-employee
director’s initial election date to the annual meeting was between 4 and 7 months; and

25% of the Subsequent Grant, or 6,250 shares, if the service period from the non-employee
director’s initial election date to the annual meeting was between 1 and 4 months.

Each Initial Grant vests in equal annual installments over three years on the anniversary of the grant date.
Each Subsequent Grant vests in full on the one-year anniversary of the grant date. The exercise price per share
of each Initial Grant and Subsequent Grant is equal to the fair market value per share on the date of grant.

Our Board may approve additional cash and equity awards for our non-employee directors in its discretion.

DIRECTOR COMPENSATION TABLE

The following table shows for the fiscal year ended December 31, 2020, certain information with respect to

the cash compensation of all non-employee directors of the Company:

Fees Earned or
Paid in Cash(1)
$85,000
$ 7,500
$49,212
—
$22,802
$57,000
$20,234
$36,016
$10,769
$65,000
$45,796
Consists of fees earned or paid in 2020 for Board and committee membership as described above.

Name
Andrew A. F. Hack, M.D., Ph.D.
Laura Brege(4)
Francis R. Cano, Ph.D.
Dennis A Carson, M.D.(4)
Julia M. Eastland
Daniel L. Kisner, M.D.
Brent MacGregor
Arnold L. Oronsky, Ph.D.
Peter R. Paradiso
Peggy V. Phillips
Natale Ricciardi
(1)

— $

Option
Awards(2)(3)
$ 62,376

$ 83,168
—
$393,570
$ 83,168
$393,570
$ 83,168
$157,580
$ 83,168
$ 83,168

Total
$147,376
7,500
$132,380
—
$416,372
$140,168
$413,804
$119,184
$168,349
$148,168
$128,964

(2)

Represents the aggregate grant date fair value of stock options granted in the fiscal year in accordance with ASC 718. See note 15 of
our ‘‘Notes to Consolidated Financial Statements’’ in our annual report on Form 10-K filed with the SEC on February 25, 2021, for a
discussion of assumptions we made in determining the compensation costs included in this column.

(3) As of December 31, 2020, each non-employee director held stock options to purchase the following number of shares of our common
stock. Dr. Hack held options to purchase 33,750 shares of our common stock. Dr. Cano held options to purchase 92,550 shares of our
common stock. Ms. Eastland held options to purchase 50,000 shares of our common stock. Dr. Kisner held options to purchase
96,950 shares of our common stock. Mr. MacGregor held options to purchase 50,000 shares of our common stock. Dr. Oronsky held
options to purchase 71,950 shares of our common stock. Mr. Paradiso held options to purchase 50,000 shares of our common stock.
Ms. Phillips held options to purchase 96,950 shares of our common stock; and Mr. Ricciardi held options to purchase 82,750 shares of
our common stock.

(4) Ms. Brege and Dr. Carson left our Board in February 2020.

45

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE GUIDELINES

In February 2016, our Board adopted Corporate Governance Guidelines that set forth key principles to guide

the Board in its exercise of responsibilities and serve the interests of the Company and our stockholders. The
Corporate Governance Guidelines were reviewed and updated by the Board in February 2018. Our Corporate
Governance Guidelines can be found on the Corporate Governance page under the Investors and Media –
Corporate Governance section of our website at www.dynavax.com. In addition, these guidelines are available in
print to any stockholder who requests a copy. Please direct all requests to our Corporate Secretary, Dynavax
Technologies Corporation, 2100 Powell Street, Suite 900, Emeryville, California 94608.

STOCKHOLDER OUTREACH AND ENGAGEMENT

Our Board of Directors and management team value the views of our stockholders and we proactively
engage with our major stockholders on a regular basis throughout the year. In addition, we seek feedback from
the governance teams of our largest institutional stockholders each year. We believe our outreach efforts help
ensure that our stockholders are aware of our governance initiatives and provide us with valuable feedback in
order to enhance our governance practices and disclosure to stockholders. We contacted the governance teams of
our largest institutional stockholders in late 2020 and early 2021. The bulk of the stockholders, while
appreciating the outreach, did not feel a need to talk at the time. We spoke with 100% of the stockholders that
wanted to provide us with feedback at that time. During these discussions, which included an opportunity for
detailed questions, our stockholders did not express concerns about our corporate governance program.

MAJORITY VOTE POLICY

Our Corporate Governance Guidelines include a provision whereby any nominee for director in an
uncontested election would submit an offer of resignation for consideration by the Nominating and Corporate
Governance Committee of the Board, if such nominee receives a greater number of ‘‘Withhold’’ votes than
‘‘For’’ votes. The Nominating and Corporate Governance Committee would then consider all of the relevant facts
and circumstances and recommend to the Board the action to be taken with respect to such offer of resignation.
Promptly following the Board’s decision, we would disclose that decision and an explanation of such decision in
a filing with the SEC or a press release.

PLEDGING/HEDGING POLICY

We have a policy that prohibits our executive officers, directors and other members of management from
engaging in short sales, transactions in put or call options, hedging transactions or other inherently speculative
transactions with respect to our stock. No waivers of this policy were requested or provided during 2020.

INDEPENDENCE OF THE BOARD OF DIRECTORS

As required under the Nasdaq Stock Market, or Nasdaq listing standards, and our Corporate Governance

Guidelines, a majority of the members of a listed company’s board of directors must qualify as ‘‘independent,’’
as affirmatively determined by the board of directors. In addition, applicable Nasdaq rules require that, subject to
specified exceptions, each member of a listed company’s audit, compensation and nominating committees be
independent within the meaning of applicable Nasdaq rules. Audit committee members must also satisfy the
independence criteria set forth in Rule 10A-3 under the Exchange Act.

Consistent with these considerations, our Board undertook a review of the independence of each director

and considered whether any director has a material relationship that could compromise his or her ability to
exercise independent judgment in carrying out his or her responsibilities. After review of all relevant transactions
or relationships between each director, or any of his or her family members, and the Company, its senior
management and its independent registered public accounting firm, the Board has affirmatively determined that
the following directors are independent directors within the meaning of the applicable Nasdaq listing standards:
Ms. Eastland, Ms. Phillips, Mr. MacGregor and Mr. Ricciardi as well as Drs. Cano, Hack, Kisner and Paradiso.
In making this determination, our Board considered certain relationships and transactions that occurred in the
ordinary course of business between the Company and entities with which some of our directors are or have
been affiliated, including, (i) in August 2019, the purchase by Bain Capital Life Sciences Fund, L.P. and BCIP

46

Life Sciences Associates, L.P. (together, ‘‘Bain Life Sciences’’) of our securities in an underwritten public
offering in the aggregate amount of approximately $35 million, and the affiliation of Dr. Hack with Bain Life
Sciences as a managing director of Bain Capital life Sciences Investors, LLC, the general partner of Bain Life
Sciences and (ii) in March 2020, the execution of a registration rights agreement and warrant exchange
agreement with Bain Life Sciences, and lastly, on May 27, 2020, the entities Bain Capital Life Sciences Fund
L.P. and its affiliate purchased an aggregate of 1,000,000 shares of Common Stock in an underwritten public
offering at a price per share of $5.00 which is further described below under ‘‘Certain Transactions –
Transactions With Related Persons.’’ We also considered Dr. Paradiso’s relationship to CEPI, as a member of its
R&D Manufacturing Investment Committee, in light of the transaction entered into between the Company and
CEPI in January of 2021, pursuant to which CEPI provided the Company, among other things, financing to
manufacture our adjuvant, CpG 1018, in the form of a forgivable loan that we can and have drawn upon, and
that CEPI partners will be able to buy CpG 1018 from us under certain prescribed terms as set forth in that same
agreement. The Board determined that none of these transactions would impair Dr. Hack’s or Dr. Paradiso’s
independence or interfere with the exercise of independent judgment in carrying out director responsibilities.

By virtue of his employment with the Company as Chief Executive Officer, Ryan Spencer is not an

independent director.

BOARD LEADERSHIP STRUCTURE

Our Board is currently chaired on an interim-basis by Dr. Hack. The duties of the chairman include
presiding over all meetings of the Board; preparing the agenda for Board meetings in consultation with the
Chief Executive Officer and other members of our Board; calling and presiding over meetings of non-employee
directors; and managing the Board’s process for annual evaluation of the Chief Executive Officer. Accordingly,
the chairman has substantial ability to shape the work of our Board. Our Board currently believes that separation
of the positions of chairman and Chief Executive Officer reinforces the independence of our Board in its
oversight of our business and affairs. In addition, such separation helps create an environment that is more
conducive to objective evaluation and oversight of management’s performance, increasing management
accountability and improving the ability of our Board to monitor whether management’s actions are in the best
interests of our Company and its stockholders.

Our Board also believes there may be advantages to having an independent chairman for matters such as
communications and relations between our Board, the Chief Executive Officer and other senior management and
in assisting our Board in reaching consensus on particular strategies and policies. Having a chairman separate
from the Chief Executive Officer also allows the chairman to focus on assisting the Chief Executive Officer and
other senior management in seeking and adopting successful business strategies and risk management policies
and in making successful choices in management succession.

BOARD’S ROLE IN RISK OVERSIGHT

Risk assessment and oversight are an integral part of our governance and management processes. Our Board

encourages management to promote a culture that incorporates risk management into our corporate strategy and
day-to-day business operations. Management discusses strategic and operational risks at regular management
meetings, and conducts specific strategic planning and review sessions during the year that include a focused
discussion and analysis of the risks facing the Company. For example, due to the public health concerns
regarding the COVID-19 outbreak, our management required that all employees work from home, except for
those who had to be in the office in order to complete their job function, and we assessed and made plans for
potential supply chain risk and other potential impact on the business globally. We continue to monitor potential
impact of the evolving COVID-19 situation on our business. Throughout the year, senior management reviews
these risks with the Board at regular Board meetings as part of management presentations that focus on particular
business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate
such risks.

Our Board does not have a standing risk management committee but rather administers this oversight
function directly through our Board as a whole as well as through various standing committees of our Board that
address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring
and assessing strategic risk exposure generally. Our Audit Committee has the responsibility to oversee our major
financial risk exposures and the steps our management has taken to monitor and control these exposures as well

47

as oversight of our enterprise risk management program. The Audit Committee also monitors compliance with
legal and regulatory requirements, oversees the performance of our internal audit function and approves or
disapproves any related-persons transactions. Additionally, in January of 2021, our Audit Committee took
responsibility for overseeing and assessing risk exposure relating to our healthcare compliance program
pertaining to healthcare laws, regulations and industry standards applicable to pharmaceutical companies, a role
that was previously administered by our full Board. Our Nominating and Corporate Governance Committee
monitors the effectiveness of our corporate governance guidelines and manages the process for annual director
self-assessment and evaluation of the Board. Our Compensation Committee assesses and monitors whether any of
our compensation policies and programs has the potential to encourage excessive risk-taking.

MEETINGS OF THE BOARD OF DIRECTORS

Our Board met 10 times during fiscal year 2020. All Board members other than Arnie Oronsky attended at

least 75% or more of the aggregate of the meetings of the Board and of the committees on which the member
served held during the period of service as a director or committee member. Dr. Oronsky passed away in
November of 2020.

COMMITTEES OF THE BOARD OF DIRECTORS

Our Board has three standing committees: an Audit Committee, a Compensation Committee and a
Nominating and Corporate Governance Committee. The following table provides membership and meeting
information for fiscal year 2020 for each of the Board committees:

Name
Andrew A. F. Hack, M.D., Ph.D.(1)
Laura Brege(1)
Dennis A. Carson, M.D.
Julie Eastland(1)
Arnold L. Oronsky, Ph.D.(1)
Brent MacGregor(2)
Daniel L. Kisner, M.D.
Francis R. Cano, Ph.D.(3)
Natale Ricciardi(2)(3)
Peggy V. Phillips

Total Members
Total Meetings

*

Committee Chairperson

Audit
X*
X*

X
X
X

X
X
3
4

Compensation
X*

Nominating

X
X
X
X*
3
8

X*
X

3
8

(1) Ms. Brege served as chairperson of our Audit Committee until February 2020 when she left our Board, and Dr. Hack became

chairperson. Dr. Oronsky served on our Audit Committee until August of 2020 at which time Ms. Eastland was appointed to the Audit
Committee and Dr. Oronsky rotated off.

(2) Mr. MacGregor was appointed to our Nominating and Corporate Governance Committee in August 2020 at which time Mr. Ricciardi

rotated off.

(3) Mr. Ricciardi was appointed to our Compensation Committee in August 2020 at which time Dr. Cano rotated off.

Below is a description of each committee of our Board. Each of the committees has authority to engage

legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities. Our Board
has determined that each member of each committee meets the applicable Nasdaq listing standards and related
rules and regulations regarding ‘‘independence’’ and that each member is free of any relationship that would
impair his or her individual exercise of independent judgment with regard to the Company.

Audit Committee

The Audit Committee for 2020 was initially comprised of four directors: Ms. Brege (Chairperson),
Dr. Hack, Dr. Oronsky and Ms. Phillips. Following Ms. Brege’s resignation from the Board in February 2020,
Dr. Hack became the Chairperson of the Audit Committee. In August 2020, in connection with her appointment
to the Board, Ms. Eastland replaced Dr. Oronsky on the committee. In March 2021, Ms. Eastland became

48

Chairperson of the committee and Dr. Hack remained a member. In addition to determining that all members of
the Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of
the Nasdaq listing standards), the Board determined that each of Ms. Eastland and Dr. Hack qualified as an
‘‘audit committee financial expert,’’ as defined in applicable SEC rules. The Board made a qualitative assessment
of Dr. Hack’s level of knowledge and experience based on a number of factors, including his formal education
and experience as a chief financial officer. The Audit Committee was established by the Board in accordance
with Section 3(a)(58)(A) of the Exchange Act to oversee the Company’s corporate accounting and financial
reporting processes and audits of its financial statements. The Audit Committee operates under a written charter
that is available on the Company’s website at http://investors.dynavax.com/corporate-governance.

Among other things, the charter specifically requires our Audit Committee to:

•

•

•

•

•

•

•

•

•

review and monitor the policies and procedures adopted by the Company to fulfill its responsibilities
regarding the fair and accurate presentation of the Company’s financial statements;

appoint, compensate, and oversee the work of the Company’s independent registered public accounting
firm;

approve and monitor all audit and non-audit services performed by the Company’s independent
registered public accounting firm;

investigate, review and report the propriety and ethical implications of any transactions between the
Company and any related persons;

consult and discuss with management and the independent registered public accounting firm regarding
the effectiveness of the Company’s internal controls over financial reporting;

establish procedures, as required under applicable law, for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal controls or auditing matters and the
confidential and anonymous submission by employees of concerns regarding questionable accounting or
auditing matters;

oversee the Company’s healthcare compliance program;

review and evaluate the Company’s accounting principles and systems of internal controls; and

review and discuss the disclosure of the Company’s annual audited financial statements and quarterly
financial statements, including reviewing the Company’s disclosures under ‘‘Management’s Discussion
and Analysis of Financial Condition and Results of Operations.’’

Management is responsible for the financial reporting process, including the system of internal controls and

for the preparation of consolidated financial statements in accordance with accounting principles generally
accepted in the United States. Ernst & Young, the Company’s independent registered public accounting firm, is
responsible for auditing or reviewing those financial statements. The Audit Committee monitors and reviews
these processes.

Report of the Audit Committee of the Board of Directors

During 2020, the Audit Committee met on four occasions. During these meetings the Audit Committee met
with Ernst & Young, without the presence of the Company’s management. During the course of these meetings,
we:

•

•

discussed with management and Ernst & Young management’s continued testing and evaluation of its
system of internal control over financial reporting. We also reviewed Ernst & Young’s Report of
Independent Registered Public Accounting Firm included in the Annual Report on Form 10-K, or
Annual Report, related to its audit of the effectiveness of the Company’s internal control over financial
reporting;

reviewed and discussed with management and Ernst & Young the annual audited financial statements
before filing the Annual Report with the SEC, addressing the acceptability of the Company’s
accounting principles and such other matters as applicable auditing standards require us to discuss; the

49

Audit Committee has discussed with Ernst & Young the matters required to be discussed by the Public
Company Accounting Oversight Board and the SEC and recommended to the Board that the financial
statements should be included in the Annual Report;

reviewed and discussed with management and Ernst & Young the Company’s quarterly unaudited
financial statements before the issuance of its quarterly financial results press releases and the filing of
its Quarterly Reports on Form 10-Q with the SEC;

discussed with management and Ernst & Young significant financial reporting matters, including
liquidity and capital requirements, and the accounting for significant transactions;

appointed and oversaw the work and compensation of Ernst & Young, including the review of
engagement agreement terms;

reviewed and provided guidance with respect to the external audit and the Company’s relationship with
Ernst & Young by (1) reviewing Ernst & Young’s proposed audit scope, approach, compensation and
independence; (2) obtaining written statements and disclosures from Ernst & Young regarding
relationships and services with the Company which may impact independence as required by applicable
requirements of the PCAOB regarding the accounting firm’s independence; (3) discussing with Ernst &
Young the financial statements and audit findings, including any significant adjustments, management
judgments and accounting estimates, significant new accounting policies and whether there were
disagreements with management; and (4) obtaining assurance from Ernst & Young that the
requirements of Section 10A of the Exchange Act have been met; and

reviewed, in conjunction with the Company’s legal counsel, all legal matters that could have a
significant impact on the Company’s financial statements or compliance policies.

•

•

•

•

•

Based on our reviews and discussions as described above, and based on the report of Ernst & Young, we

recommended to the Board, and the Board approved, that the audited financial statements be included in the
Company’s Annual Report for the year ended December 31, 2020, filed with the SEC. We also approved, subject
to stockholder ratification, the selection of Ernst & Young as the Company’s independent registered public
accounting firm for 2021. In making this recommendation, we considered whether Ernst & Young’s provision of
services other than audit services is compatible with maintaining independence of our independent registered
public accounting firm. Although we have the sole authority to appoint the independent registered public
accounting firm, we continued the long-standing practice of recommending that the Board ask the stockholders at
their Annual Meeting to ratify the appointment of Ernst & Young as the Company’s independent registered public
accounting firm.

The material in this report is not ‘‘soliciting material,’’ is not deemed ‘‘filed’’ with the SEC and is not to be

incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the
‘‘Securities Act’’) or the Exchange Act, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.

Ms. Julie Eastland (Chairperson)
Andrew A. F. Hack, M.D., Ph.D.
Ms. Peggy V. Phillips

Compensation Committee

For 2020, Our Compensation Committee was initially composed of three directors: Ms. Phillips

(Chairperson) and Drs. Kisner and Cano. In August 2020, Mr. Ricciardi was appointed to the Compensation
Committee, replacing Dr. Cano. All members of the Compensation Committee are independent as required by
Nasdaq Rule 5605(d) (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards),
are ‘‘outside directors’’ for purposes of Section 162(m) of the Code and are ‘‘non-employee directors’’ for
purposes of Rule 16b-3 under the Exchange Act.

50

During 2020, the Compensation Committee held eight meetings. The Compensation Committee acts on
behalf of the Board to review, recommend for adoption, and oversee the Company’s compensation strategy,
policies, plans and programs. The Compensation Committee operates under a written charter that is available on
the Company’s website at http://investors.dynavax.com/corporate-governance. Among other things, the charter
specifically requires our Compensation Committee to:

•

•

•

•

•

Annually review and approve the Company’s corporate goals and objectives relevant to Chief
Executive Officer compensation, evaluate the Chief Executive Officer’s performance in light of such
goals and objectives, and recommend to the Board the Chief Executive Officer’s compensation level
based on this evaluation. In determining the long-term incentive component of the Chief Executive
Officer’s compensation, the Compensation Committee will consider the Company’s performance and
relative stockholder return, the value of similar incentive awards to Chief Executive Officers at
comparable companies, and the awards given to the Company’s Chief Executive Officer in past years;

annually review and make recommendations to the Board with respect to incentive compensation plans
and equity-based plans;

annually review Director compensation and make recommendation to the Board;

administer the Company’s incentive-compensation plans and equity-based plans as in effect and as
adopted from time to time by the Board provided that the Board shall retain the authority to interpret
such plans;

annually review and approve for the Company’s executive officers as defined in Rule 16a-1(f) of the
Exchange Act: i) annual base salary levels; ii) annual incentive compensation levels; iii) long-term
incentive compensation levels; and iv) employment agreements, severance agreements, change of
control agreements/provisions and any other compensatory arrangements, in each case as, when and if
appropriate;

• make regular reports to the Board; and
•

perform such other functions and have such other powers consistent with the Compensation Committee
Charter, the Company’s Bylaws and governing laws as the Compensation Committee or the Board may
deem appropriate.

Under its charter, our Compensation Committee may form, and delegate authority to, subcommittees, as
appropriate. Our Compensation Committee has authorized and delegated authority to our Chief Executive Officer
to grant stock options to employees and consultants who are not officers of the Company from pre-approved
pools and in accordance with guidelines designated for new hire and annual grants. The purpose of this
delegation is to enhance the flexibility of option administration within the Company and to facilitate the timely
grant of options to non-executive employees, particularly new employees, within specified limits and values
approved by our Compensation Committee.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2020, none of the members of our Compensation Committee at
any time has been one of our officers or employees or an officer or employee of one of our subsidiaries at any
time during the fiscal year ended December 31, 2020. None of our executive officers currently serve, or in the
past year has served, as a member of the board of directors or compensation committee of any entity that has
one or more executive officers on our Board or Compensation Committee.

Nominating and Corporate Governance Committee

For 2020, our Nominating and Corporate Governance Committee was initially composed of three directors:

Drs. Kisner (Chairperson) and Cano, and Mr. Ricciardi. In August 2020, Mr. MacGregor was appointed to the
Nominating and Corporate Governance Committee, replacing Mr. Ricciardi. All members of the Nominating and
Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of
the Nasdaq listing standards). The Nominating and Corporate Governance Committee is responsible for
identifying, reviewing and evaluating candidates to serve as directors of the Company (consistent with criteria
approved by the Board), reviewing and evaluating incumbent directors and identifying with the Chief Executive
Officer candidates for appointment or election to the Board.

51

In identifying potential director candidates, the Nominating and Corporate Governance Committee considers

Board candidates through a variety of methods and sources. These include suggestions from current Board
members, senior management, stockholders, professional search firms and other sources. At this time, the
Nominating and Corporate Governance Committee does not have a policy with regard to the consideration of
director candidates recommended by stockholders. While the Nominating and Corporate Governance Committee
does not have such a formal policy, it will consider such a recommendation, as reflected by its decision to
recommend Mr. Ricciardi to the Board following a stockholder recommendation. Our Board believes that it is
appropriate that the Nominating and Corporate Governance Committee does not have such a policy because the
Nominating and Corporate Governance Committee reviews all candidates in the same manner regardless of the
source of the recommendation. In the case of a new director candidate, the Nominating and Corporate
Governance Committee also determines whether the nominee is independent based upon applicable Nasdaq
listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. Among the
qualifications to be considered in the selection of candidates are broad experience in business, finance or
administration, familiarity with the Company’s industry, and prominence and reputation. Since prominence and
reputation in a particular profession or field of endeavor are what bring most persons to the Board’s attention,
there is further consideration of whether the individual has the time available to devote to the work of the Board
and one or more of its committees. In addition, our Nominating and Corporate Governance Committee will
consider whether the candidate assists in achieving a mix of members that represents a diversity of backgrounds
and experience, including with respect to age, gender, international background, race and specialized experience.
Each year, our Nominating and Corporate Governance Committee reviews its Board membership criteria and
assesses the composition of the Board against the criteria.

The members of the Nominating and Corporate Governance Committee informally discussed committee business

a number of times during the year and the Nominating and Corporate Governance Committee held eight formal
meetings during 2020. The Nominating and Corporate Governance Committee has adopted a written charter that is
available to stockholders on the Company’s website at http://investors.dynavax.com/corporate-governance.

52

STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Stockholders may communicate with our Board by directing comments, concerns, and questions to the

Corporate Secretary at Dynavax Technologies Corporation, 2100 Powell Street, Suite 900, Emeryville,
California 94608. Communications will be distributed to the Board, or to any individual directors as appropriate,
depending on the facts and circumstances outlined in the communication. In that regard, our Board has requested
that certain items that are unrelated to the duties and responsibilities of the Board be filtered, including product
complaints or inquiries, new product suggestions, résumés and other forms of job inquiries, surveys, or business
solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly
unsuitable will be excluded, with the provision that any communication that is filtered out must be made
available to any non-employee director upon request. Stockholders may also communicate with our Board as a
group through our website at https://investors.dynavax.com/corporate-governance/contact-the-board. All
communications directed to the Audit Committee in accordance with our whistleblower policy that relate to
questionable accounting or auditing matters involving the Company will be promptly and directly forwarded to
the chairperson of the Audit Committee. Every effort has been made to ensure that the views of stockholders are
heard by the Board or individual directors, as applicable, and that appropriate responses are provided to
stockholders in a timely manner.

53

CERTAIN TRANSACTIONS

Except as described below, since January 1, 2020, there has not been, nor is there currently proposed, any
transaction or series of similar transactions to which the Company was or is to be a party in which the amount
involved exceeds $120,000 and in which any current director, executive officer, holder of more than 5% of our
common stock or any immediate family member of any of the foregoing persons had or will have a direct or
indirect material interest other than compensation arrangements, described under the sections entitled ‘‘Executive
Compensation’’ and ‘‘ Director Compensation,’’ and with respect to the indemnification agreements described
below.

Related Persons Transactions and Indemnification

Policies and Procedures for Related Person Transactions

Our Audit Committee is responsible for reviewing and approving all related party transactions, which would

include a transaction, arrangement or relationship (or any series of similar transactions, arrangements or
relationships) in which we and any ‘‘related person’’ are participants involving an amount that exceeds $120,000,
not including transactions involving compensation for services provided to Dynavax as an employee, director,
consultant or similar capacity by a related person. Related parties include any of our directors or executive
officers, certain of our stockholders and their immediate family members. This obligation is set forth in writing
in the Audit Committee charter. A copy of the Audit Committee charter is available on the Company’s website at
http://investors.dynavax.com/corporate-governance.

Where a transaction has been identified as a related-person transaction, management would present
information regarding the proposed related-person transaction to the Audit Committee (or, where Audit
Committee approval would be inappropriate, to another independent body of the Board) for consideration and
approval or ratification. The presentation would include a description of, among other things, the material facts,
the interests, direct and indirect, of the related persons, the benefits to Dynavax of the transaction and whether
any alternative transactions were available. To identify related-person transactions in advance, the Audit
Committee relies on information supplied by our executive officers and directors. In considering related-person
transactions, the Audit Committee takes into account the relevant available facts and circumstances including, but
not limited to (a) the risks, costs and benefits to Dynavax, (b) the impact on a director’s independence in the
event the related person is a director, immediate family member of a director or an entity with which a director
is affiliated, (c) the terms of the transaction, (d) the availability of other sources for comparable services or
products and (e) the terms available to or from, as the case may be, unrelated third parties or to or from
employees generally. In the event a director has an interest in the proposed transaction, the director must recuse
himself or herself from the deliberations and approval. In determining whether to approve, ratify or reject a
related-person transaction, the Audit Committee considers, in light of known circumstances, whether the
transaction is, or is not, consistent with the best interests of Dynavax and our stockholders, as the Audit
Committee determines in the good faith exercise of its discretion.

Transactions With Related Persons

On May 27, 2020, the entities Bain Capital Life Sciences Fund L.P. and its affiliate purchased an aggregate

of 1,000,000 shares of Common Stock in an underwritten public offering at a price per share of $5.00.
Bain Capital Life Sciences Fund L.P. purchased 907,145 of such shares for cash consideration of $4,535,725 and
BCIP Life Sciences purchased 92,855 of such shares for cash consideration of $464,275. Bain Capital Life
Sciences Investors, LLC is the general partner of Bain Life Sciences. Andrew A. F. Hack, M.D., Ph.D., a
managing director of Bain Capital Life Sciences Investors, LLC, is on our Board.

On March 11, 2020, we entered into a registration rights agreement with Bain Life Sciences, pursuant to
which we agreed, subject to certain exceptions, to register all of the shares of our common stock and Series B
convertible preferred stock, and warrants to purchase shares of our common stock, held by Bain Life Sciences as
of the date of the registration rights agreement. We have agreed to provide Bain Life Sciences with customary
indemnification in in connection with the registration and sale of Bain Life Sciences’ securities pursuant to the
registration rights agreement.

On March 11, 2020, we also entered into a warrant exchange agreement with Bain Life Sciences pursuant to

which we agreed that we would, upon future notice from Bain Life Sciences (and subject to certain other

54

conditions), exchange all or a portion of the common stock warrants held by Bain Life Sciences for warrants to
purchase a new Series C convertible preferred stock. Such preferred warrants would be exercisable for a number
of shares of Series C convertible preferred stock equal to (x) the number of shares of common stock for which
the outstanding common warrants then remain exercisable, divided by (y) 1,000. In connection with such
exchange, if any, we would be obligated to file a certificate of designation to specify the powers, preferences,
rights, qualifications, limitations and restrictions of the Series C convertible preferred stock. The Series C
certificate of designation will provide that each share of Series C convertible preferred stock would be
convertible into 1,000 shares of common stock, with a conversion price of $4.50, and would be on parity with,
and would otherwise have substantially identical rights to, our Series B convertible preferred stock. Our
obligations under the warrant exchange agreement also include the execution of a registration rights agreement,
upon request of Bain Life Sciences, concurrent with the warrant exchange, if any, pursuant to which we would
register the exchange securities in a manner substantially similar to the registration rights agreement described
above.

Indemnity Agreements

We have entered into indemnity agreements with some of our officers and directors so that they will be free

from undue concern about personal liability in connection with their service to the Company. The indemnity
agreements provide, among other things, that the Company will indemnify such officer or director, under the
circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he
or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of
his or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent
permitted under Delaware law.

DELINQUENT SECTION 16(A) REPORTS

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who

own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of common stock and other equity securities of the
Company. Officers, directors and greater-than-ten-percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the

Company and written representations that no other reports were required, during the fiscal year ended
December 31, 2020, all Section 16(a) filing requirements applicable to its officers, directors and
greater-than-ten-percent beneficial owners were in compliance, other than one report on Form 4 that was filed
late by Brent MacGregor, one of our directors, covering one transaction which was required to report the receipt
of an equity award, due July 19, 2020, but filed July 22, 2020.

CODE OF BUSINESS CONDUCT AND ETHICS

We have adopted the Dynavax Code of Business Conduct and Ethics that applies to all officers, directors

and employees. Our Code of Business Conduct and Ethics is available on our website at
http://investors.dynavax.com/corporate-governance and upon written request. We will provide a written copy of
the Dynavax Code of Business Conduct and Ethics to anyone without charge, upon request written to
Dynavax Technologies Corporation, Attention: Corporate Secretary, 2100 Powell Street, Suite 900, Emeryville,
California 94608, or contact Dynavax’s Corporate Secretary at (510) 848-5100. If we make any substantive
amendments to or grant any waiver from a provision of the Code of Business Conduct and Ethics to any
executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.
There have been no waivers under the Code of Business Conduct and Ethics as of the date of filing of this proxy
statement.

55

SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of the Company’s common stock

as of January 31, 2021 by: (i) each director and nominee for director; (ii) the NEOs; (iii) all executive officers
and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of
more than five percent of its common stock.

Name and Address of Beneficial Holder
5% Stockholders
Federated Hermes, Inc.(4)
State Street Corporation(5)
Bain Capital Life Sciences Fund, L.P.(6)
BlackRock, Inc.(7)
Chicago Capital LLC(8)
NEOs and Directors(1)
Ryan Spencer(9)
David F. Novack(10)
Michael S. Ostrach(11)
Kelly MacDonald
Robert Janssen, M.D.(12)
Francis R. Cano, Ph.D.(13)
Julia M. Eastland
Andrew A. F. Hack, M.D., Ph.D.(14)
Daniel L. Kisner, M.D.(15)
Brent MacGregor
Peter R. Paradiso(16)
Peggy V. Phillips(17)
Natale Ricciardi(18)
All executive officers and directors as a group (13 persons)(19)
**

Less than one percent.

Number of
Shares(2)

Percent of Shares
Beneficially
Owned(3)

12,521,800
10,887,296
10,895,773
8,188,156
5,782,610

404,417
650,203
709,194
—
508,278
88,384
—
10,895,773
73,450
—
3,000
106,584
57,750
13,497,033

11.31%
9.88%
9.99%
7.40%
5.25%

*
*
*
*
*
*
*
9.99%
*
*
*
*
*
11.77%

(1)

(2)

(3)

(4)

(5)

(6)

The address of each of the NEOs and directors is c/o Dynavax Technologies Corporation, 2100 Powell Street, Suite 900, Emeryville,
California 94608.

To our knowledge, except as set forth in the footnotes to this table, and subject to applicable community property laws, each person
named in this table has sole voting and investment power with respect to the shares set forth opposite such person’s name.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with
respect to the securities. Shares of our common stock subject to options currently exercisable or that will become exercisable within
60 days after January 31, 2021, are deemed outstanding for computing the percentage of the person holding such options but are not
deemed outstanding for computing the percentage of any other person. Applicable percentages are based on 110,189,859 shares of our
common stock outstanding as of January 31, 2021, adjusted as required by the rules of the SEC.

This information is based solely on Schedule 13G/A filed by Federated Hermes, Inc. on February 12, 2021, with the SEC. Federated
Hermes, Inc. beneficially owns 12,521,800 shares and has sole dispositive or sole voting power. The address of the principal business
and office of Federated Hermes, Inc. is, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. The Schedule 13G/A provides information
only as of December 31, 2020 and consequently, the beneficial ownership of the above-mentioned reporting person may have changed
between December 31, 2020 and January 31, 2021.

This information is based solely on a Schedule 13G filed by State Street Corporation on February 11, 2021, with the SEC. State Street
Corp. beneficially owns 10,887,296 shares and has no sole dispositive or sole voting power. The address of the principal business and
office of State Street Corp. is, One Lincoln Street, Boston, MA 02111. The Schedule 13G provides information only as of
December 31, 2020, and, consequently, the beneficial ownership of the above-mentioned reporting person may have changed between
December 31, 2020 and January 31, 2021.

This information is based primarily on Schedule 13D/A filed by Bain Capital Life Sciences Fund, L.P. on May 28, 2020, with the SEC.
Bain Capital Life Sciences Fund L.P. holds 7,733,411 shares of common stock, 3,756 shares of Series B preferred stock and warrants to
purchase 2,645,566 shares of common stock. BCIP Life Sciences Associates, LP holds 791,589 shares of common stock, 384 shares of
Series B preferred stock and warrants to purchase 270,684 shares of common stock. Also includes 5,000 options held by Dr. Hack for
the benefit of Bain Capital Life Sciences Fund, L.P. As a result of the Beneficial Ownership Blocker, beneficial ownership is capped at
9.99% of the outstanding common stock of the issuer. The address of the principal business and office of Bain Capital Life Sciences
Fund, L.P. is, 200 Clarendon Street, Boston, MA 02116. The Schedule 13G provides information only as of May 27, 2020.

56

(7)

(8)

(9)

This information is based solely on Schedule 13G/A filed by BlackRock, Inc. on January 29, 2021 with the SEC. BlackRock, Inc.
beneficially owns and has sole dispositive power over 8,188,156 shares of common stock, of which 7,975,325 shares are held with sole
voting power. The address of the principal business and office of BlackRock, Inc. is, 55 East 52nd Street, New York, NY 10055. The
Schedule 13G provides information only as of December 31, 2020 and consequently, the beneficial ownership of the above-mentioned
reporting person may have changed between December 31, 2020 and January 31, 2021.

This information is based solely on Schedule 13G filed by Chicago Capital LLC on February 23, 2021, with the SEC. Chicago Capital
LLC beneficially owns 5,782,610 shares and has sole dispositive or sole voting power. The address of the principal business and office
of Chicago Capital LLC is, 135 South LaSalle Street, Suite 3450, Chicago, IL 60603. The Schedule 13G provides information only as
of December 31, 2020 and consequently, the beneficial ownership of the above-mentioned reporting person may have changed between
December 31, 2020 and January 31, 2021.

Consists of 58,059 shares of common stock owned directly by Mr. Spencer, restricted stock awards to be converted into 20,833 shares
of common stock within 60 days of January 31, 2021 and options to purchase 325,525 shares of common stock exercisable within
60 days of January 31, 2021.

(10) Consists of 134,899 shares of common stock owned directly by Mr. Novack, warrants to purchase 4,167 shares of common stock and

options to purchase 511,137 shares of common stock exercisable within 60 days of January 31, 2021.

(11) Consists of 117,167 shares of common stock owned directly by Mr. Ostrach and options to purchase 592,027 shares of common stock

exercisable within 60 days of January 31, 2021.

(12) Consists of 128,640 shares of common stock owned directly by Dr. Janssen and options to purchase 379,638 shares of common stock

exercisable within 60 days of January 31, 2021.

(13) Consists of 16,667 shares of common stock owned directly by Dr. Cano, warrants to purchase 4,167 shares of common stock and

options to purchase 67,550 shares of common stock exercisable within 60 days of January 31, 2021.

(14) This information is based primarily on Schedule 13D/A filed by Bain Capital Life Sciences Fund, L.P. on May 28, 2020, with the SEC.
Bain Capital Life Sciences Fund L.P. holds 7,733,411 shares of common stock, 3,756 shares of Series B preferred stock and warrants to
purchase 2,645,566 shares of common stock. BCIP Life Sciences Associates, LP holds 791,589 shares of common stock, 384 shares of
Series B preferred stock and warrants to purchase 270,684 shares of common stock. Also includes 5,000 options held by Dr. Hack for
the benefit of Bain Capital Life Sciences Fund, L.P. As a result of the Beneficial Ownership Blocker, beneficial ownership is capped at
9.99% of the outstanding common stock of the issuer. Bain Capital Life Sciences Investors, LLC (‘‘BCLSI’’) is the ultimate general
partner of BCLS and governs the investment strategy and decision making process with respect to investments held by BCIPLS.
Dr. Hack is a Managing Director of BCLSI. By virtue of these relationships, Dr. Hack may be deemed to share voting and dispositive
power with respect to shares of common stock held by the Bain Life Sciences Entities. Dr. Hack disclaims beneficial ownership of
such securities except to the extent of his pecuniary interest therein.

(15) Consists of 1,500 shares of common stock owned directly by Dr. Kisner and options to purchase 71,950 shares of common stock

exercisable within 60 days of January 31, 2021.

(16) Consists of 3,000 shares of common stock owned directly by Mr. Paradiso.

(17) Consists of 30,468 shares of common stock owned directly by Ms. Phillips, warrants to purchase 4,166 shares of common stock and

options to purchase 71,950 shares of common stock exercisable within 60 days of January 31, 2021.

(18) Consists of options to purchase 57,750 shares of common stock exercisable within 60 days of January 31, 2021.

(19) Total number of shares includes common stock, Series B preferred stock and warrants to purchase common stock, in aggregate, held as
of January 31, 2021, by our executive officers and directors and entities affiliated with such executive officers and directors. Also
includes restricted stock awards to be converted into 20,833 shares of common stock within 60 days of January 31, 2021 and options to
purchase 2,082,527 shares of common stock exercisable within 60 days of January 31, 2021.

57

PERFORMANCE GRAPH

The chart below compares total stockholder return on an investment of $100 in cash on December 31, 2015,

for: our common stock, the Nasdaq Stock Market (U.S. companies), and the Nasdaq Pharmaceutical Preparation
Index. All values assume reinvestment of the full amount of all dividends.

Note: Dynavax management cautions that the stock price performance shown in the graph below should not

be considered indicative of potential future stock price performance.

This Section is not ‘‘soliciting material,’’ is not deemed ‘‘filed’’ with the SEC and is not to be incorporated
by reference in any filing of Dynavax Technologies Corporation under the Securities Act, or the Exchange Act,
whether made before or after the date hereof and irrespective of any general incorporation language in any such
filing.

58

HOUSEHOLDING OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery

requirements for Notices of Internet Availability of Proxy Materials or other annual meeting materials with
respect to two or more stockholders sharing the same address by delivering a single Notice of Internet
Availability of Proxy Materials or other annual meeting materials addressed to those stockholders. This process,
which is commonly referred to as ‘‘householding,’’ potentially means extra convenience for stockholders and cost
savings for companies.

This year, a number of brokers with account holders who are Dynavax stockholders will be ‘‘householding’’

the Company’s proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to
multiple stockholders sharing an address unless contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker that they will be ‘‘householding’’ communications
to your address, ‘‘householding’’ will continue until you are notified otherwise or until you revoke your consent.
If, at any time, you no longer wish to participate in ‘‘householding’’ and would prefer to receive a separate
Notice of Internet Availability of Proxy Materials, please notify your broker or Dynavax. Direct your written
request to Dynavax Technologies Corporation, Attention: Corporate Secretary, 2100 Powell Street, Suite 900,
Emeryville, California 94608, or contact Dynavax’s Corporate Secretary at (510) 848-5100. Stockholders who
currently receive multiple copies of the Annual Meeting materials at their addresses and would like to request
‘‘householding’’ of their communications should contact their brokers.

The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any

other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best judgment.

OTHER MATTERS

By Order of the Board of Directors

Kelly MacDonald
Chief Financial Officer

April 16, 2021

A copy of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020,

is available without charge upon written request to: Dynavax Technologies Corporation, Attention:
Corporate Secretary, 2100 Powell Street, Suite 900, Emeryville, California 94608.

59

[THIS PAGE INTENTIONALLY LEFT BLANK]

 
 
 
Appendix A

Amended and Restated 2014 ESPP

DYNAVAX TECHNOLOGIES CORPORATION
2014 EMPLOYEE STOCK PURCHASE PLAN

ADOPTED BY THE BOARD OF DIRECTORS: APRIL 10, 2014
APPROVED BY THE STOCKHOLDERS: MAY 28, 2014
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: APRIL 22, 2016
APPROVED BY THE STOCKHOLDERS: MAY 31, 2016
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: APRIL 8, 2018
APPROVED BY THE STOCKHOLDERS: MAY 31, 2018
AMENDED AND RESTATED BY THE COMPENSATION COMMITTEE: MARCH 30, 2021

[APPROVED BY THE STOCKHOLDERS:

, 2021]

1. GENERAL; PURPOSE.

(a) The Plan provides a means by which Eligible Employees of the Company and certain designated
Related Corporations may be given an opportunity to purchase shares of Common Stock. The Plan permits the
Company to grant a series of Purchase Rights to Eligible Employees under an Employee Stock Purchase Plan.

(b) The Company, by means of the Plan, seeks to retain the services of such Employees, to secure and
retain the services of new Employees and to provide incentives for such persons to exert maximum efforts for
the success of the Company and its Related Corporations.

2. ADMINISTRATION.

(a) The Board will administer the Plan unless and until the Board delegates administration of the Plan to a

Committee or Committees, as provided in Section 2(c).

(b) The Board will have the power, subject to, and within the limitations of, the express provisions of the

Plan:

(i) To determine how and when Purchase Rights will be granted and the provisions of each Offering

(which need not be identical).

(ii) To designate from time to time which Related Corporations of the Company will be eligible to

participate in the Plan.

(iii) To construe and interpret the Plan and Purchase Rights, and to establish, amend and revoke rules
and regulations for the administration of the Plan. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it deems necessary or expedient
to make the Plan fully effective.

(iv) To settle all controversies regarding the Plan and Purchase Rights granted under the Plan.

(v) To suspend or terminate the Plan at any time as provided in Section 12.

(vi) To amend the Plan at any time as provided in Section 12.

(vii) Generally, to exercise such powers and to perform such acts as it deems necessary or expedient

to promote the best interests of the Company and its Related Corporations and to carry out the intent that
the Plan be treated as an Employee Stock Purchase Plan.

(viii) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation

in the Plan by Employees who are foreign nationals or employed outside the United States.

(c) The Board may delegate some or all of the administration of the Plan to a Committee or Committees.
If administration is delegated to a Committee, the Committee will have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including
the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee), subject,

however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee
and may, at any time, revest in the Board some or all of the powers previously delegated. Whether or not the
Board has delegated administration of the Plan to a Committee, the Board will have the final power to determine
all questions of policy and expediency that may arise in the administration of the Plan.

(d) All determinations, interpretations and constructions made by the Board in good faith will not be

subject to review by any person and will be final, binding and conclusive on all persons.

3.

SHARES OF COMMON STOCK SUBJECT TO THE PLAN.

(a) Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, the maximum number

of shares of Common Stock that may be issued under the Plan will not exceed 1,850,000 shares of Common
Stock, which number is the sum of (i) 50,000 shares that were approved at the Company’s 2014 Annual Meeting
of Stockholders,1 (ii) an additional 200,000 shares that were approved at the Company’s 2016 Annual Meeting of
Stockholders, (iii) an additional 600,000 shares that were approved at the Company’s 2018 Annual Meeting of
Stockholders, and (iv) an additional 1,000,000 shares that were approved at the Company’s 2021 Annual Meeting
of Stockholders.

(b)

If any Purchase Right granted under the Plan terminates without having been exercised in full, the
shares of Common Stock not purchased under such Purchase Right will again become available for issuance
under the Plan.

(c) The stock purchasable under the Plan will be shares of authorized but unissued or reacquired Common

Stock, including shares repurchased by the Company on the open market.

4. GRANT OF PURCHASE RIGHTS; OFFERING.

(a) The Board may from time to time grant or provide for the grant of Purchase Rights to Eligible
Employees under an Offering (consisting of one or more Purchase Periods) on an Offering Date or Offering
Dates selected by the Board. Each Offering will be in such form and will contain such terms and conditions as
the Board will deem appropriate and will comply with the requirement of Section 423(b)(5) of the Code that all
Employees granted Purchase Rights will have the same rights and privileges. The terms and conditions of an
Offering will be incorporated by reference into the Plan and treated as part of the Plan. The provisions of
separate Offerings need not be identical, but each Offering will include (through incorporation of the provisions
of this Plan by reference in the document comprising the Offering or otherwise) the period during which the
Offering will be effective, which period will not exceed 27 months beginning with the Offering Date, and the
substance of the provisions contained in Sections 5 through 8, inclusive.

(b)

If a Participant has more than one Purchase Right outstanding under the Plan, unless he or she

otherwise indicates in forms delivered to the Company: (i) each form will apply to all of his or her Purchase
Rights under the Plan, and (ii) a Purchase Right with a lower exercise price (or an earlier-granted Purchase
Right, if different Purchase Rights have identical exercise prices) will be exercised to the fullest possible extent
before a Purchase Right with a higher exercise price (or a later-granted Purchase Right if different Purchase
Rights have identical exercise prices) will be exercised.

(c) The Board will have the discretion to structure an Offering so that if the Fair Market Value of a share

of Common Stock on the first Trading Day of a new Purchase Period within that Offering is less than or equal to
the Fair Market Value of a share of Common Stock on the Offering Date for that Offering, then (i) that Offering
will terminate immediately as of that first Trading Day, and (ii) the Participants in such terminated Offering will
be automatically enrolled in a new Offering beginning on the first Trading Day of such new Purchase Period.

5. ELIGIBILITY.

(a) Purchase Rights may be granted only to Employees of the Company or, as the Board may designate in

accordance with Section 2(b), to Employees of a Related Corporation. Except as provided in Section 5(b), an
Employee will not be eligible to be granted Purchase Rights unless, on the Offering Date, the Employee has been

1. The 500,000 shares approved at the Company’s 2014 Annual Meeting of Stockholders were adjusted to 50,000 shares pursuant to a

1-for-10 reverse stock split effective November 7, 2014.

in the employ of the Company or the Related Corporation, as the case may be, for such continuous period
preceding such Offering Date as the Board may require, but in no event will the required period of continuous
employment be equal to or greater than two years. In addition, the Board may provide that no Employee will be
eligible to be granted Purchase Rights under the Plan unless, on the Offering Date, such Employee’s customary
employment with the Company or the Related Corporation is more than 20 hours per week and more than five
months per calendar year or such other criteria as the Board may determine consistent with Section 423 of the
Code.

(b) The Board may provide that each person who, during the course of an Offering, first becomes an
Eligible Employee will, on a date or dates specified in the Offering which coincides with the day on which such
person becomes an Eligible Employee or which occurs thereafter, receive a Purchase Right under that Offering,
which Purchase Right will thereafter be deemed to be a part of that Offering. Such Purchase Right will have the
same characteristics as any Purchase Rights originally granted under that Offering, as described herein, except
that:

(i)

the date on which such Purchase Right is granted will be the ‘‘Offering Date’’ of such Purchase

Right for all purposes, including determination of the exercise price of such Purchase Right;

(ii)

the period of the Offering with respect to such Purchase Right will begin on its Offering Date and

end coincident with the end of such Offering; and

(iii)

the Board may provide that if such person first becomes an Eligible Employee within a specified

period of time before the end of the Offering, he or she will not receive any Purchase Right under that
Offering.

(c) No Employee will be eligible for the grant of any Purchase Rights if, immediately after any such

Purchase Rights are granted, such Employee owns stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or of any Related Corporation. For purposes of this
Section 5(c), the rules of Section 424(d) of the Code will apply in determining the stock ownership of any
Employee, and stock which such Employee may purchase under all outstanding Purchase Rights and options will
be treated as stock owned by such Employee.

(d) As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights
only if such Purchase Rights, together with any other rights granted under all Employee Stock Purchase Plans of
the Company and any Related Corporations, do not permit such Eligible Employee’s rights to purchase stock of
the Company or any Related Corporation to accrue at a rate which exceeds $25,000 of Fair Market Value of such
stock (determined at the time such rights are granted, and which, with respect to the Plan, will be determined as
of their respective Offering Dates) for each calendar year in which such rights are outstanding at any time.

(e) Officers of the Company and any designated Related Corporation, if they are otherwise Eligible
Employees, will be eligible to participate in Offerings under the Plan. Notwithstanding the foregoing, the Board
may provide in an Offering that Employees who are highly compensated Employees within the meaning of
Section 423(b)(4)(D) of the Code will not be eligible to participate.

6.

PURCHASE RIGHTS; PURCHASE PRICE.

(a) On each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, will be

granted a Purchase Right to purchase up to that number of shares of Common Stock purchasable either with a
percentage or with a maximum dollar amount, as designated by the Board, but in either case not exceeding 10%
of such Employee’s earnings (as defined by the Board in each Offering) during the period that begins on the
Offering Date (or such later date as the Board determines for a particular Offering) and ends on the date stated in
the Offering, which date will be no later than the end of the Offering.

(b) The Board will establish one or more Purchase Dates during an Offering on which Purchase Rights
granted for that Offering will be exercised and shares of Common Stock will be purchased in accordance with
such Offering.

(c)

In connection with each Offering made under the Plan, the Board may specify (i) a maximum number
of shares of Common Stock that may be purchased by any Participant pursuant to such Offering, (ii) a maximum
number of shares of Common Stock that may be purchased by any Participant on any Purchase Date pursuant to
such Offering, (iii) a maximum aggregate number of shares of Common Stock that may be purchased by all

Participants pursuant to such Offering, and/or (iv) a maximum aggregate number of shares of Common Stock
that may be purchased by all Participants on any Purchase Date pursuant to such Offering. If the aggregate
purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under such Offering
would exceed any such maximum aggregate number, then, in the absence of any Board action otherwise, a pro
rata (based on each Participant’s accumulated Contributions) allocation of the shares of Common Stock available
will be made in as nearly a uniform manner as will be practicable and equitable.

(d) The purchase price of shares of Common Stock acquired pursuant to Purchase Rights will be not less

than the lesser of:

(i)
Date; or

an amount equal to 85% of the Fair Market Value of the shares of Common Stock on the Offering

(ii)

an amount equal to 85% of the Fair Market Value of the shares of Common Stock on the

applicable Purchase Date.

7.

PARTICIPATION; WITHDRAWAL; TERMINATION.

(a) An Eligible Employee may elect to authorize payroll deductions as the means of making Contributions

by completing and delivering to the Company, within the time specified in the Offering, an enrollment form
provided by the Company. The enrollment form will specify the amount of Contributions not to exceed the
maximum amount specified by the Board. Each Participant’s Contributions will be credited to a bookkeeping
account for such Participant under the Plan and will be deposited with the general funds of the Company except
where applicable law requires that Contributions be deposited with a third party. If permitted in the Offering, a
Participant may begin such Contributions with the first full payroll period beginning on the Offering Date. If
permitted in the Offering, a Participant may thereafter decrease (including to zero) or increase his or her
Contributions. If specifically provided in the Offering, in addition to making Contributions by payroll deductions,
a Participant may make Contributions through payment by cash or check prior to a Purchase Date.

(b) During an Offering, a Participant may cease making Contributions and withdraw from the Offering by
delivering to the Company a withdrawal form provided by the Company. The Company may impose a deadline
before a Purchase Date for withdrawing. Upon such withdrawal, such Participant’s Purchase Right in that
Offering will immediately terminate and the Company will distribute to such Participant all of his or her
accumulated but unused Contributions without interest. A Participant’s withdrawal from that Offering will have
no effect upon his or her eligibility to participate in any other Offerings under the Plan, but such Participant will
be required to deliver a new enrollment form to participate in subsequent Offerings.

(c) Upon either (i) termination of a Participant’s employment relationship with the Company or a Related
Corporation that has been designated as eligible to participate in the Plan or (ii) any other circumstance or event
that causes a Participant to no longer be eligible to participate in an Offering, the Company will distribute to
such individual all of his or her accumulated but unused Contributions without interest and such individual’s
outstanding Purchase Rights under such Offering will terminate immediately (subject to any post-employment
participation period required by law).

For purposes of the Plan, the employment relationship will be treated as continuing intact while an
individual is on military leave, sick leave or other bona fide leave of absence approved by the Company or a
Related Corporation, if applicable, if the period of such leave does not exceed three months, or if longer, so long
as the individual’s right to reemployment with the Company or a Related Corporation, if applicable, is provided
either by statute or by contract.

(d) During a Participant’s lifetime, Purchase Rights will be exercisable only by such Participant. Purchase

Rights are not transferable by a Participant, except by will, by the laws of descent and distribution, or, if
permitted by the Company, by a beneficiary designation as described in Section 10.

(e) Unless otherwise specified in the Offering, the Company will have no obligation to pay interest on

Contributions.

8.

EXERCISE OF PURCHASE RIGHTS.

(a) On each Purchase Date, each Participant’s accumulated Contributions will be applied to the purchase

of shares of Common Stock, up to the maximum number of shares of Common Stock permitted by the Plan and
the applicable Offering, at the purchase price specified in the Offering. No fractional shares will be issued unless
specifically provided for in the Offering.

(b)

If any amount of accumulated Contributions remains in a Participant’s account after the purchase of
shares of Common Stock and such remaining amount is less than the amount required to purchase one share of
Common Stock on the final Purchase Date of an Offering, then such remaining amount will be held in such
Participant’s account for the purchase of shares of Common Stock under the next Offering under the Plan, unless
such Participant withdraws from or is not eligible to participate in such Offering, in which case such amount will
be distributed to such Participant after the final Purchase Date without interest. If the amount of Contributions
remaining in a Participant’s account after the purchase of shares of Common Stock is at least equal to the
amount required to purchase one whole share of Common Stock on the final Purchase Date of an Offering, then
such remaining amount will not roll over to the next Offering and will instead be distributed in full to such
Participant after the final Purchase Date of such Offering without interest.

(c) No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be issued
upon such exercise under the Plan are covered by an effective registration statement pursuant to the Securities
Act and the Plan is in material compliance with all applicable federal, state, foreign and other securities and
other laws applicable to the Plan. If, on a Purchase Date, the shares of Common Stock are not so registered or
the Plan is not in such compliance, no Purchase Rights will be exercised on such Purchase Date, and the
Purchase Date will be delayed until the shares of Common Stock are subject to such an effective registration
statement and the Plan is in material compliance, except that the Purchase Date will in no event be more than
6 months from the Offering Date. If, on the Purchase Date, as delayed to the maximum extent permissible, the
shares of Common Stock are not registered and the Plan is not in material compliance with all applicable laws,
no Purchase Rights will be exercised and all accumulated but unused Contributions will be distributed to the
Participants without interest.

9. COVENANTS OF THE COMPANY.

The Company will seek to obtain from each federal, state, foreign or other regulatory commission or agency

having jurisdiction over the Plan such authority as may be required to grant Purchase Rights and issue and sell
shares of Common Stock thereunder. If, after commercially reasonable efforts, the Company is unable to obtain
the authority that counsel for the Company deems necessary for the grant of Purchase Rights or the lawful
issuance and sale of Common Stock under the Plan, and at a commercially reasonable cost, the Company will be
relieved from any liability for failure to grant Purchase Rights and/or to issue and sell Common Stock upon
exercise of such Purchase Rights.

10. DESIGNATION OF BENEFICIARY.

(a) The Company may, but is not obligated to, permit a Participant to submit a form designating a
beneficiary who will receive any shares of Common Stock and/or Contributions from the Participant’s account
under the Plan if the Participant dies before such shares and/or Contributions are delivered to the Participant. If a
Participant is married and the designated beneficiary is not the Participant’s spouse, the Company may require
spousal consent for such designation to be effective. The Company may, but is not obligated to, permit the
Participant (subject to spousal consent, if applicable and required by the Company) to change such designation of
beneficiary. Any such designation and/or change must be on a form approved by the Company.

(b)

If a Participant dies, and in the absence of a valid beneficiary designation, the Company will deliver

any shares of Common Stock and/or Contributions to the executor or administrator of the estate of the
Participant. If no executor or administrator has been appointed (to the knowledge of the Company), the
Company, in its sole discretion, may deliver such shares of Common Stock and/or Contributions to the
Participant’s spouse, dependents or relatives, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.

(a)

In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust:

(i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a); (ii) the class(es)

and number of securities subject to, and the purchase price applicable to outstanding Offerings and Purchase
Rights; and (iii) the class(es) and number of securities that are the subject of the purchase limits under each
ongoing Offering. The Board will make these adjustments, and its determination will be final, binding and
conclusive.

(b)

In the event of a Corporate Transaction, the surviving or acquiring corporation (or the surviving or
acquiring corporation’s parent or subsidiary company) will assume or continue outstanding Purchase Rights or
will substitute similar rights (including a right to acquire the same consideration paid to the stockholders in the
Corporate Transaction) for outstanding Purchase Rights, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption, continuation or substitution, to shorten any Offerings then in progress
by setting a new Purchase Date prior to the Corporate Transaction (the ‘‘New Purchase Date’’). If the Board sets
a New Purchase Date pursuant to the preceding sentence, then the Board will notify each Participant in writing,
at least ten (10) business days prior to the New Purchase Date, that the Purchase Date for the Participant’s
outstanding Purchase Rights has been changed to the New Purchase Date and that either:

(i)

the Participant’s outstanding Purchase Rights will be exercised automatically on the New Purchase

Date, unless the Participant withdraws from the applicable Offering prior to the New Purchase Date in
accordance with Section 7(b), and such Purchase Rights will terminate immediately after such exercise; or

(ii)

in lieu of such exercise, the Company will pay to the Participant on the New Purchase Date an
amount in cash, cash equivalents, or property as determined by the Board that is equal to the difference in
the Fair Market Value of the shares of Common Stock subject to the Participant’s outstanding Purchase
Rights on the New Purchase Date and the applicable exercise price due had such Purchase Rights been
exercised automatically under Section 11(b)(i) above, and such Purchase Rights will terminate immediately
after such payment.

12. AMENDMENT, TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board may amend the Plan at any time in any respect the Board deems necessary or advisable.
However, except as provided in Section 11(a) relating to Capitalization Adjustments, stockholder approval will be
required for any amendment of the Plan for which stockholder approval is required by applicable law or listing
requirements, including any amendment that either (i) materially increases the number of shares of Common
Stock available for issuance under the Plan, (ii) materially expands the class of individuals eligible to become
Participants and receive Purchase Rights, (iii) materially increases the benefits accruing to Participants under the
Plan or materially reduces the price at which shares of Common Stock may be purchased under the Plan,
(iv) materially extends the term of the Plan, or (v) expands the types of awards available for issuance under the
Plan, but in each of (i) through (v) above only to the extent stockholder approval is required by applicable law or
listing requirements.

(b) The Board may suspend or terminate the Plan at any time. No Purchase Rights may be granted under

the Plan while the Plan is suspended or after it is terminated.

(c) Any benefits, privileges, entitlements and obligations under any outstanding Purchase Rights granted

before an amendment, suspension or termination of the Plan will not be materially impaired by any such
amendment, suspension or termination except (i) with the consent of the person to whom such Purchase Rights
were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations
(including, without limitation, the provisions of Section 423 of the Code and the regulations and other
interpretive guidance issued thereunder relating to Employee Stock Purchase Plans) including, without limitation,
any such regulations or other guidance that may be issued or amended after the date the Plan is adopted by the
Board, or (iii) as necessary to obtain or maintain favorable tax, listing, or regulatory treatment. To be clear, the
Board may amend outstanding Purchase Rights without a Participant’s consent if such amendment is necessary to
ensure that the Purchase Right and/or the Plan complies with the requirements of Section 423 of the Code.

Notwithstanding anything in the Plan or any Offering Document to the contrary, the Board will be entitled

to: (i) establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars;
(ii) permit Contributions in excess of the amount designated by a Participant in order to adjust for mistakes in
the Company’s processing of properly completed Contribution elections; (iii) establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the
purchase of Common Stock for each Participant properly correspond with amounts withheld from the

Participant’s Contributions; (iv) amend any outstanding Purchase Rights or clarify any ambiguities regarding the
terms of any Offering to enable the Purchase Rights to qualify under and/or comply with Section 423 of the
Code; and (v) establish other limitations or procedures as the Board determines in its sole discretion advisable
that are consistent with the Plan. The actions of the Board pursuant to this paragraph will not be considered to
alter or impair any Purchase Rights granted under an Offering as they are part of the initial terms of each
Offering and the Purchase Rights granted under each Offering.

13. EFFECTIVE DATE OF PLAN.

The Plan will become effective on the date of the annual meeting of stockholders of the Company held in
2014, provided the Plan is approved by the Company’s stockholders at such meeting. No Purchase Rights will be
exercised unless and until the Plan has been approved by the stockholders of the Company, which approval must
be within 12 months before or after the date the Plan is adopted (or if required under Section 12(a), materially
amended) by the Board.

14. MISCELLANEOUS PROVISIONS.

(a) Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights will constitute general

funds of the Company.

(b) A Participant will not be deemed to be the holder of, or to have any of the rights of a holder with

respect to, shares of Common Stock subject to Purchase Rights unless and until the Participant’s shares of
Common Stock acquired upon exercise of Purchase Rights are recorded in the books of the Company (or its
transfer agent).

(c) The Plan and Offering do not constitute an employment contract. Nothing in the Plan or in the
Offering will in any way alter the at will nature of a Participant’s employment or be deemed to create in any
way whatsoever any obligation on the part of any Participant to continue in the employ of the Company or a
Related Corporation, or on the part of the Company or a Related Corporation to continue the employment of a
Participant.

(d) The provisions of the Plan will be governed by the laws of the State of California without resort to

that state’s conflicts of laws rules.

15. DEFINITIONS.

As used in the Plan, the following definitions will apply to the capitalized terms indicated below:

(a)

(b)

‘‘Board’’means the Board of Directors of the Company.

‘‘Capitalization Adjustment’’ means any change that is made in, or other events that occur with respect

to, the Common Stock subject to the Plan or subject to any Purchase Right after the date the Plan is adopted by
the Board without the receipt of consideration by the Company through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash
dividend, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate
structure or other similar equity restructuring transaction, as that term is used in Financial Accounting Standards
Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing,
the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

(c)

‘‘Code’’ means the Internal Revenue Code of 1986, as amended, including any applicable regulations

and guidance thereunder.

(d)

‘‘Committee’’ means a committee of one or more members of the Board to whom authority has been

delegated by the Board in accordance with Section 2(c).

(e)

(f)

(g)

‘‘Common Stock’’ means the common stock of the Company.

‘‘Company’’ means Dynavax Technologies Corporation, a Delaware corporation.

‘‘Contributions’’ means the payroll deductions and other additional payments specifically provided for

in the Offering that a Participant contributes to fund the exercise of a Purchase Right. A Participant may make
additional payments into his or her account if specifically provided for in the Offering, and then only if the
Participant has not already had the maximum permitted amount withheld during the Offering through payroll
deductions.

(h)

‘‘Corporate Transaction’’ means the consummation, in a single transaction or in a series of related

transactions, of any one or more of the following events:

(i)

a merger or consolidation in which the Company is not the surviving entity, except for a

transaction the principal purpose of which is to change the state in which the Company is incorporated;

(ii)

the sale, transfer or other disposition of all or substantially all of the assets of the Company

(including the capital stock of the Company’s subsidiary corporations);

(iii)

the complete liquidation or dissolution of the Company;

(iv)

any reverse merger or series of related transactions culminating in a reverse merger (including,

but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving
entity but in which securities possessing more than forty percent (40%) of the total combined voting power
of the Company’s outstanding securities are transferred to a person or persons different from those who held
such securities immediately prior to such merger or the initial transaction culminating in such merger but
excluding any such transaction or series of related transactions that the Board determines will not be a
Corporate Transaction; or

(v)

acquisition in a single or series of related transactions by any person or related group of persons

(other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company’s outstanding securities but excluding any such
transaction or series of related transactions that the Board determines will not be a Corporate Transaction.

(i)

(j)

‘‘Director’’ means a member of the Board.

‘‘Eligible Employee’’ means an Employee who meets the requirements set forth in the document(s)

governing the Offering for eligibility to participate in the Offering, provided that such Employee also meets the
requirements for eligibility to participate set forth in the Plan.

(k)

‘‘Employee’’ means any person, including an Officer or Director, who is ‘‘employed’’ for purposes of
Section 423(b)(4) of the Code by the Company or a Related Corporation. However, service solely as a Director,
or payment of a fee for such services, will not cause a Director to be considered an ‘‘Employee’’ for purposes of
the Plan.

(l)

‘‘Employee Stock Purchase Plan’’ means a plan that grants Purchase Rights intended to be options

issued under an ‘‘employee stock purchase plan,’’ as that term is defined in Section 423(b) of the Code.

(m)

‘‘Exchange Act’’ means the Securities Exchange Act of 1934, as amended and the rules and

regulations promulgated thereunder.

(n)

‘‘Fair Market Value’’ means, as of any date, the value of the Common Stock determined as follows:

(i)

If the Common Stock is listed on any established stock exchange or traded on any established

market, the Fair Market Value of a share of Common Stock will be the closing sales price for such stock as
quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the
Common Stock) on the date of determination, as reported in such source as the Board deems reliable.
Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date
of determination, then the Fair Market Value will be the closing sales price on the last preceding date for
which such quotation exists.

(ii)

In the absence of such markets for the Common Stock, the Fair Market Value will be determined

by the Board in good faith in compliance with applicable laws and in a manner that complies with
Section 409A of the Code.

(o)

‘‘Offering’’ means the grant to Eligible Employees of Purchase Rights, with the exercise of those

Purchase Rights automatically occurring at the end of one or more Purchase Periods. The terms and conditions of
an Offering will generally be set forth in the ‘‘Offering Document’’ approved by the Board for that Offering.

(p)

‘‘Offering Date’’ means a date selected by the Board for an Offering to commence.

(q)

‘‘Officer’’ means a person who is an officer of the Company or a Related Corporation within the

meaning of Section 16 of the Exchange Act.

(r)

‘‘Participant’’ means an Eligible Employee who holds an outstanding Purchase Right.

(s)

(t)

‘‘Plan’’ means this Dynavax Technologies Corporation 2014 Employee Stock Purchase Plan.

‘‘Purchase Date’’ means one or more dates during an Offering selected by the Board on which

Purchase Rights will be exercised and on which purchases of shares of Common Stock will be carried out in
accordance with such Offering.

(u)

‘‘Purchase Period’’ means a period of time specified within an Offering, generally beginning on the

Offering Date or on the first Trading Day following a Purchase Date, and ending on a Purchase Date. An
Offering may consist of one or more Purchase Periods.

(v)

‘‘Purchase Right’’ means an option to purchase shares of Common Stock granted pursuant to the Plan.

(w)

‘‘Related Corporation’’ means any ‘‘parent corporation’’ or ‘‘subsidiary corporation’’ of the Company
whether now or subsequently established, as those terms are defined in Sections 424(e) and (f), respectively, of
the Code.

(x)

‘‘Securities Act’’ means the Securities Act of 1933, as amended.

(y)

‘‘Trading Day’’ means any day on which the exchange(s) or market(s) on which shares of Common
Stock are listed, including but not limited to the NYSE, the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market or any successors thereto, is open for trading.

[THIS PAGE INTENTIONALLY LEFT BLANK]

 
 
 
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  

Form 10-K  

(Mark One) 
☒  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

For the fiscal year ended December 31, 2020 

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

For the transition period from                        to                         

Commission file number: 001-34207  

Dynavax Technologies Corporation  

(Exact name of registrant as specified in its charter)  

Delaware 
(State or other jurisdiction of 
incorporation or organization) 

33-0728374 
(IRS Employer 
Identification No.) 

2100 Powell Street, Suite 900  
Emeryville, CA 94608  
(510) 848-5100  
(Address, including Zip Code, and telephone number, including area code, of the registrant’s principal executive offices)  

Title of each class: 
Common Stock, $0.001 par value 

Trading symbol(s): 
DVAX 

Name of each exchange on which registered: 
The Nasdaq Stock Market LLC  

Securities registered pursuant to Section 12(b) of the Act:  

Securities Registered Pursuant to Section 12(g) of the Act:  
None  

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐ 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing 
requirements for the past 90 days.    Yes  ☒   No  ☐  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 

of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit such 
files).    Yes  ☒    No  ☐  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 

an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth 
company” in Rule 12b-2 of the Exchange Act.  

Large accelerated filer ☒ 
Emerging growth company ☐  

Accelerated filer ☐ 

Non-accelerated filer ☐ 

Smaller reporting company ☐ 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any 

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal 
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared 
or issued its audit report.  ☒ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒  
The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant, based upon the closing sale price of the 
common stock on June 30, 2020 as reported on the Nasdaq Capital Market, was approximately $884.4 million. Shares of common stock held by each officer 
and director and by each person known to the Company who owns 5% or more of the outstanding common stock have been excluded in that such persons 
may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.  

As of February 22, 2021, the registrant had outstanding 113,256,101 shares of common stock.  

DOCUMENTS INCORPORATED BY REFERENCE  

Portions of the Definitive Proxy Statement for the registrant’s 2021 Annual Meeting of Stockholders are incorporated by reference into Part III, Items 

10-14 of this Form 10-K. The Definitive Proxy Statement will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 
31, 2020. 

 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
 
 
 
 
 
 
INDEX  

DYNAVAX TECHNOLOGIES CORPORATION  

PART I 

    Page No. 

Item 1. 

  BUSINESS ...........................................................................................................................................................

Item 1A.   RISK FACTORS ..................................................................................................................................................

Item 1B.   UNRESOLVED STAFF COMMENTS ...............................................................................................................

Item 2. 

  PROPERTIES ......................................................................................................................................................

Item 3. 

  LEGAL PROCEEDINGS ................................................................................................................................   

Item 4. 

  MINE SAFETY DISCLOSURE ..........................................................................................................................

PART II 

Item 5. 

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER 

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES .........................................................

Item 6. 

  SELECTED FINANCIAL DATA .......................................................................................................................

Item 7. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 

OF OPERATIONS ..........................................................................................................................................

Item 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ................................   

Item 8. 

  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ................................................................   

Item 9. 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 

FINANCIAL DISCLOSURE ..........................................................................................................................

Item 9A.   CONTROLS AND PROCEDURES ....................................................................................................................

Item 9B.   OTHER INFORMATION ................................................................................................................................   

PART III 

Item 10.   

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE .............................................

Item 11.   EXECUTIVE COMPENSATION .......................................................................................................................

Item 12. 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 

RELATED STOCKHOLDER MATTERS ................................................................................................   

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR 

Item 13.   

INDEPENDENCE...........................................................................................................................................

Item 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES ......................................................................................

PART IV 

Item 15.   

EXHIBITS, FINANCIAL STATEMENT SCHEDULES ....................................................................................

Item 16.   

FORM 10-K SUMMARY ................................................................................................................................   

SIGNATURES .....................................................................................................................................................

2 

6

20

40

40

40

40

41

41

42

56

57

90

90

91

92

92

92

92

92

93

97

98

  
  
    
  
   
  
   
  
   
  
   
  
  
   
  
  
  
  
   
  
   
  
  
  
   
  
  
  
  
  
   
  
   
  
  
  
  
   
  
   
  
  
  
  
   
  
   
  
  
  
   
  
  
  
  
  
   
 
FORWARD-LOOKING STATEMENTS  

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the 

Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which are subject to a number of risks and 
uncertainties. All statements that are not historical facts are forward-looking statements, including statements about the 
direct and indirect impact of the ongoing COVID-19 global pandemic on our business and operations, including sales of 
HEPLISAV-B®, our ability to successfully commercialize HEPLISAV-B, our anticipated market opportunity and level of 
sales of HEPLISAV-B, our ability to manufacture sufficient supply of HEPLISAV-B to meet future demand, our business, 
collaboration and regulatory strategy, our ability to successfully support the development and commercialization of other 
vaccines containing our novel adjuvant CpG 1018, including any potential vaccine for COVID-19, our ability to manufacture 
sufficient supply of CpG 1018 to meet potential future demand in connection with new vaccines, including any potential 
COVID-19 vaccine, and to meet regulatory requirements, uncertainty regarding our capital needs and future operating 
results and profitability, anticipated sources of funds, liquidity and cash needs, as well as our plans, objectives, strategies, 
expectations and intentions. These statements appear throughout our document and can be identified by the use of forward-
looking language such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” 
“future,” or “intend,” or the negative of these terms or other variations or comparable terminology. In addition, statements 
that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based 
upon information available to us as of the date of this Form 10-K, and while we believe such information forms a reasonable 
basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate 
that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These 
statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. 

Actual results may vary materially from those in our forward-looking statements as a result of various factors that are 

identified in “Item 1A—Risk Factors” and “Item 7—Management’s Discussion and Analysis of Financial Condition and 
Results of Operations” and elsewhere in this document. No assurance can be given that the risk factors described in this 
Annual Report on Form 10-K are all of the factors that could cause actual results to vary materially from the forward-
looking statements. All forward-looking statements speak only as of the date of this Annual Report on Form 10-K. Readers 
should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking 
statements are not guarantees of future performance. We assume no obligation to update any forward-looking statements.  

This Annual Report on Form 10-K includes trademarks and registered trademarks of Dynavax Technologies 
Corporation. Products or service names of other companies mentioned in this Annual Report on Form 10-K may be 
trademarks or registered trademarks of their respective owners. References herein to “we,” “our,” “us,” “Dynavax” or the 
“Company” refer to Dynavax Technologies Corporation and its subsidiaries. 

3 

 
 
RISK FACTOR SUMMARY 

Below is a summary of material factors that make an investment in our securities speculative or risky. Importantly, this 

summary does not address all of the risks and uncertainties that we face. Additional discussion of the risks and uncertainties 
summarized in this risk factor summary, as well as other risks and uncertainties that we face, can be found in the more 
detailed discussion that follows this summary, and the below summary is qualified in its entirety by that more complete 
discussion of such risks and uncertainties. You should consider carefully the risks and uncertainties described herein as part 
of your evaluation of an investment in our securities: 

  HEPLISAV-B has been launched in the United States, and approved in the European Union, and there is 

significant competition in the marketplace. Since this is our first marketed product, the timing of uptake and 
distribution efforts are unpredictable and there is a risk that we may not achieve and sustain commercial success 
for HEPLISAV-B. 

  Our business and operations have been and may continue to be adversely affected by the evolving and ongoing 

COVID-19 global pandemic. While we have entered into collaborative relationships to develop vaccines utilizing 
CpG 1018, including collaborations to develop a vaccine for COVID-19, our collaborators generally have primary 
responsibility for the development, conduct of clinical trials, and for seeking and obtaining regulatory approval, 
and these collaborations may not be successful. If the combination of patents, trade secrets and other proprietary 
rights that we rely on to protect our intellectual property rights in CpG 1018 are inadequate; we may be unable to 
realize any commercial benefit from the development of a vaccine containing CpG 1018.  

  We face uncertainty regarding coverage, pricing and reimbursement and the practices of third-party payors, which 
may make it difficult or impossible to sell our product or product candidates on commercially reasonable terms. 

  We are subject to ongoing United States Food and Drug Administration (“FDA”) 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 problems with HEPLISAV-B. 

 

If HEPLISAV-B or any products we develop are not accepted by the market or if regulatory agencies 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 revenues, if any. 

  Many of our competitors have greater financial resources and expertise than we do. If we are unable to 

successfully compete with existing or potential competitors as a result of these disadvantages, we may be unable 
to generate sufficient or any revenues and our business will be harmed. 

  We have incurred net losses in each year since our inception and anticipate that we will continue to incur 

significant losses for the foreseeable future unless we can successfully commercialize HEPLISAV-B or CpG 1018, 
and if we are unable to achieve and sustain profitability, the market value of our common stock will likely decline. 
Until we are able to generate significant revenues or achieve profitability through product sales, we will require 
substantial additional capital to finance our operations.  

  We may develop, seek regulatory approval for and market HEPLISAV-B or any other product candidates we may 
develop outside the U.S., requiring a significant commitment of resources. Failure to successfully manage our 
international operations could result in significant unanticipated costs and delays in regulatory approval or 
commercialization of our product candidates. 

  Clinical trials for our commercial product and product candidates are expensive and time consuming, may take 

longer than we expect or may not be completed at all, and their outcomes are uncertain. 

  As a biopharmaceutical company, we engage clinical research organizations (“CROs”) to conduct clinical studies, 

and failure by us or our CROs to conduct a clinical study in accordance with good clinical practice standards and 
other applicable regulatory requirements could result in disqualification of the applicable clinical trial from 
consideration in support of approval of a potential product. 

  Regulatory authorities may require more clinical trials for our product candidates than we currently expect or are 
conducting before granting regulatory approval, if regulatory approval is granted at all. Our clinical trials may be 
extended which may lead to substantial delays in the regulatory approval process for our product candidates and 
may impair our ability to generate revenues. 

  HEPLISAV-B and most of our earlier stage programs, including our CpG 1018 adjuvant rely on oligonucleotide 
toll-like receptor (“TLR”) agonists. Serious adverse event data relating to TLR agonists may require us to reduce 
the scope of or discontinue our operations, or reevaluate the viability of strategic alternatives. 

4 

  As we plan for broader commercialization of HEPLISAV-B and for expanded capacity to manufacture CpG 1018, 
our financial commitments to increase supply capacity might outpace actual demand for our products. Also, if we 
are unable to maintain our production operations in Dusseldorf and our existing supplier for CpG 1018, we would 
have to establish alternate qualified manufacturing capabilities, which could result in significant additional 
operating costs and delays in developing and commercializing HEPLISAV-B and any potential vaccine utilizing 
CpG 1018. There can be no assurance that we or other third parties will be able to produce CpG 1018 at a cost, 
quantity and quality sufficient to support our existing or any future collaborations. 

  We rely on our facility in Düsseldorf, Germany and third parties to supply materials or perform processes 

necessary to manufacture HEPLISAV-B. We rely on a limited number of suppliers to produce the 
oligonucleotides we require for development and commercialization. Additionally, we have limited experience in 
manufacturing our product candidates in commercial quantities. With respect to HEPLISAV-B, we have switched 
to a pre-filled syringe presentation of the vaccine and our ability to meet future demand will depend on our ability 
to manufacture sufficient supply in this presentation. 

  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 for which we are reliant upon third parties to 
manufacture on our behalf.  

  HEPLISAV-B is subject to regulatory obligations and continued regulatory review, and if we receive regulatory 
approval for our other product candidates, we will be subject to ongoing FDA and foreign regulatory obligations 
and continued regulatory review for such products. 

  A key part of our business strategy for products in development is to establish collaborative relationships to help 
fund development and commercialization of our product candidates and research programs. We may not succeed 
in establishing and maintaining collaborative relationships, which may significantly limit our ability to continue to 
develop and commercialize those products and programs, if at all. 

  The term loan agreement we entered into in February 2018 imposes significant operating and financial restrictions 
on us that may prevent us from pursuing certain business opportunities and restrict our ability to operate our 
business.  

  We rely on CROs and clinical sites and investigators for our clinical trials. If these third parties do not fulfill their 
contractual obligations or meet expected deadlines, our planned clinical trials may be delayed and we may fail to 
obtain the regulatory approvals necessary to commercialize our product candidates. 

  As we focus on commercialization of HEPLISAV-B, we may encounter difficulties in managing our commercial 

growth and expanding our operations successfully. 

 

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. 

  The loss of key personnel could delay or prevent achieving our objectives. In addition, our continued growth to 
support commercialization may result in difficulties in managing our growth and expanding our operations 
successfully. 

  We face product liability exposure, which, if not covered by insurance, could result in significant financial 

liability. Our business operations are vulnerable to interruptions by natural disasters, health epidemics and other 
catastrophic events beyond our control, the occurrence of which could materially harm our manufacturing, 
distribution, sales, business operations and financial results. Significant disruptions of information technology 
systems or breaches of data security could also adversely affect our business. 

  We rely on licenses to intellectual property from third parties. Impairment of these licenses or our inability to 

maintain them would severely harm our business. 

 

If third parties successfully assert that we have infringed their patents and proprietary rights or challenge our 
patents and proprietary rights, we may become involved in intellectual property disputes and litigation that would 
be costly, time consuming and delay or prevent development or commercialization of our product candidates. 

  Future sales of our common stock or the perception that such sales may occur in the public market could cause our 

stock price to fall. 

5 

ITEM 1. 

BUSINESS  

OVERVIEW 

PART I 

We are a commercial stage biopharmaceutical company focused on developing and commercializing novel vaccines. 
Our first marketed product, HEPLISAV-B® (Hepatitis B Vaccine (Recombinant), Adjuvanted), is approved by the United 
States Food and Drug Administration (“FDA”) for prevention of infection caused by all known subtypes of hepatitis B virus 
in adults age 18 years and older. HEPLISAV-B is the only two-dose hepatitis B vaccine for adults approved in the U.S. In 
Phase 3 trials, HEPLISAV-B demonstrated faster and higher rates of protection with two doses in one month compared to 
another currently approved hepatitis B vaccine, which requires three doses over six months, with a similar safety profile. We 
have worldwide commercial rights to HEPLISAV-B and we market it in the United States. We received Marketing 
Authorization approval of  HEPLISAV-B in February 2021 from the European Commission following a positive 
recommendation in December 2020 from the European Medicines Agency (“EMA”) Committee for Medicinal Products 
(“CHMP”) for Human Use for prevention of infection caused by all known subtypes of hepatitis B virus in adults age 18 
years and older.  We expect to launch HEPLISAV-B in the European Union (“EU”) in late 2021, initially focusing on one or 
a few key countries where it would be commercially feasible to market HEPLISAV-B on our own or through third-parties.  

We also manufacture and sell CpG 1018, the adjuvant used in HEPLISAV-B. We developed CpG 1018 to provide an 
increased vaccine immune response, as demonstrated in HEPLISAV-B. We are expanding the use of CpG 1018 to support 
the development and potential large-scale manufacturing of additional vaccines through collaborations with multiple vaccine 
companies and academic groups and in our own vaccine development programs. Current collaborations are focused on 
adjuvanted vaccines for COVID-19, with several in clinical development. In September 2020, we entered into a commercial 
supply agreement to provide our collaborator Valneva Scotland Limited (“Valneva”) with CpG 1018 to produce 60 to 100 
million doses of their vaccine in 2021 and up to an additional 90 million doses through 2024. Our tetanus, diphtheria, and 
acellular pertussis (“Tdap”) booster vaccine candidate, adjuvanted with CpG 1018, is in a Phase 1 study and a CpG 1018 
based influenza vaccine is expected to enter clinical development during 2021.   

COVID-19 Update 

We are continuing to closely monitor the impact of the evolving effects of the COVID-19 pandemic on our business 

and are taking proactive efforts designed to protect the health and safety of our workforce, patients and healthcare 
professionals, and to continue our business operations and advance our goal of bringing important new vaccines to patients as 
rapidly as possible.  

Our customers’ procurement activities coupled with restrictions at healthcare facilities during the pandemic, has 
negatively affected our sales of HEPLISAV-B. This is consistent with reduced utilization of adult vaccines generally, 
because focus in healthcare has been acutely placed on the treatment and prevention of COVID-19. The COVID-19 
pandemic continued to disrupt the adult vaccine market in the fourth quarter with market utilization shifting back to a sharp 
decline from the third quarter recovery trend. The total adult hepatitis B market saw a reduction in utilization of 
approximately 35% in the fourth quarter compared to the same period last year. In the third quarter, utilization was down 
approximately 24% from the same period last year. Additionally, Centers for Disease Control and Prevention (“CDC”) 
guidance requiring 14-day spacing of vaccines before and after COVID-19 vaccine administration began to stall other adult 
vaccine utilization in the month of December and has continued to impact utilization into the first quarter which is a trend we 
believe will continue throughout the first half of 2021. Although utilization of vaccines generally has decreased during the 
pandemic, our sales efforts have continued to increase our market share.  

We have also seen increased interest in our advanced adjuvant, CpG 1018, from our collaborators who are focused on 
developing COVID-19 vaccines of their own, as well as other potential vaccine candidates targeted at other indications. As a 
result, we have been working with our supplier to secure additional manufacturing capacity to help support this increased 
interest in CpG 1018. 

Currently, our HEPLISAV-B post-marketing observational studies are fully enrolled and continuing uninterrupted. Due 

to the design and conduct of the studies, we do not anticipate an impact to the integrity of the studies from “shelter in place” 
mandates. The HEPLISAV-B dialysis study is able to continue, because the dialysis treatment is classified under “essential 
travel” exemptions. 

6 

The extent of the impact of the COVID-19 pandemic on our ability to generate sales and revenues, our regulatory 
efforts, our corporate development objectives and the value of and market for our common stock, will depend on future 
developments that are highly uncertain and cannot be predicted with confidence at this time. Because of the above and other 
factors, our results of operations may vary substantially from year to year and from quarter to quarter and, as a result, we 
believe that period-to-period comparisons of our operating results may not be meaningful and should not be relied upon as 
being indicative of our future performance. For additional information on the various current and future potential risks posed 
by the COVID-19 pandemic, please read Item 1A. Risk Factors, included herein. 

OUR STRATEGY 

Our primary objectives are to make HEPLISAV-B the standard of care in the U.S. for immunization of adults against 

hepatitis B and to establish CpG 1018 as a premier vaccine adjuvant.  

Our strategy for HEPLISAV-B is to focus our commercial efforts on: 

 

 

 

 

converting the current market to HEPLISAV-B,  

expanding adult immunization and coverage rates, 

increasing second dose compliance, and 

expanding our market to persons with diabetes.  

Our strategy for CpG 1018 is to demonstrate its potential to provide a robust immune response in a range of novel 
vaccines by collaborating with leading commercial and academic vaccine developers throughout the world. We believe that 
successful development of CpG 1018 adjuvanted vaccines will enable us to become a commercial supplier of adjuvant to our 
commercial partners and provide a potential source of new vaccines for further advancement by Dynavax. In addition, 
through collaborations with our partners, we continue to pursue additional vaccine candidates adjuvanted with CpG 1018, 
including, but not limited to, vaccine candidates for Tdap and universal influenza. We also expect that we could attempt to 
develop other vaccine candidates for additional indications, either alone or with collaborators, in the future. 

HEPLISAV-B  

The Company's first commercial product, HEPLISAV-B (Hepatitis B Vaccine, (Recombinant), Adjuvanted), is 

approved by the FDA and the European Commission (approved in the EU in February 2021) for prevention of infection 
caused by all known subtypes of hepatitis B virus in adults age 18 years and older.   

HEPLISAV-B combines CpG 1018, our proprietary TLR9 agonist adjuvant, and recombinant hepatitis B surface 
antigen (“rHBsAg” or “HBsAg”) that is manufactured by Dynavax GmbH, our wholly owned subsidiary, in Düsseldorf, 
Germany. 

About Hepatitis B 

Hepatitis B is a viral disease of the liver that can become chronic and lead to cirrhosis of the liver, liver cancer and 
death. Hepatitis B virus is an extremely infectious and potentially deadly virus. It can be spread through the exchange of body 
fluids, such as semen or blood, and is 50 to 100 times more infectious than HIV. 

Hepatitis B can be either acute or chronic. Acute hepatitis B virus infection is a short-term illness that occurs within the 

first six months after exposure to the hepatitis B virus. Acute infection can — but does not always — lead to chronic 
infection. Chronic hepatitis B virus infection is a long-term illness that occurs when the hepatitis B virus remains in a 
person’s body.  

There is no cure for hepatitis B, but the disease can be prevented through effective vaccination. The World Health 
Organization (“WHO”) and CDC have set a goal to eliminate all viral hepatitis infections, including hepatitis B, globally by 
2030, and are calling for a continued commitment to increase services to eliminate hepatitis.  

Worldwide, an estimated 257 million people are living with hepatitis B, including at least 850,000 in the United States, 

where an estimated 21,000 new infections occur each year. 

7 

In adults, sexual transmission of hepatitis B may occur, particularly in unvaccinated men who have sex with men and 
heterosexual persons who have multiple sex partners or contact with sex workers. Transmission of the virus may also occur 
through the reuse of needles and syringes either in healthcare settings or among persons who inject drugs. Infection also can 
occur during medical, surgical and dental procedures, or through tattooing or the use of razors contaminated with infected 
blood.  

Recommendations for Adult Vaccination to Prevent Hepatitis B  

Adult vaccination to prevent hepatitis B is recommended by the CDC Advisory Committee on Immunization Practices 

(“ACIP”) for many at-risk populations, including certain healthcare and public safety workers, people with diabetes and 
travelers. The ACIP recommendation includes adults with the following risks: 

  Environmental Related Risk - Health care and first responders, travelers, persons who are in close contact with 
hepatitis B infected patients, residents and staff of facilities for developmentally disabled persons and those who 
work with HBV-infected primates or HBV in the lab; 

 

Increased Risk or Severity of Disease due to Chronic Conditions - Adults with diabetes, end stage renal disease, 
HIV and chronic liver disease; 

  Behavioral Risk – Men who have sex with men, persons with multiple sex partners, STD clinic patients, inmates, 

IV drug users.  

Protection Against Hepatitis B by HEPLISAV-B 

The approval of HEPLISAV-B was based on data from three Phase 3 non-inferiority trials of nearly 10,000 adult 
participants who received HEPLISAV-B. These pivotal studies compared HEPLISAV-B administered in two doses over one 
month to Engerix-B® administered in three doses over a six-month schedule. Results from HBV-23, the largest Phase 3 trial, 
which included 6,665 participants, showed that HEPLISAV-B demonstrated a statistically significantly higher rate of 
protection of 95% compared with 81% for Engerix-B. Across the three clinical trials, the most common local reaction was 
injection site pain (23% to 39%). The most common systemic reactions were fatigue (11% to 17%) and headache (8% to 
17%).  

We are also conducting an open-label, single arm study evaluating a 4-dose regimen of HEPLISAV-B in adults with 
end-stage renal disease who are initiating or undergoing hemodialysis. In January 2021, we reported final immunogenicity 
results that included a seroprotection rate of 89.3% with high levels of anti-HBs antibodies. Interim safety data showed 
HEPLISAV-B is well tolerated and no safety concerns were observed. Interim data may not be indicative of any data post-
completion of this trial and we cannot guarantee that HEPLISAV-B will be safe or effective, or otherwise successful in this 
clinical trial. Due to the general health condition of the patient population participating in this particular study, adults with 
end-stage renal disease undergoing hemodialysis, we do expect to see a higher potential incidence of adverse events reporting 
than what we saw with previous trials for HEPLISAV-B. We expect that the last patient visit for this trial will be in 
September 2021, and we expect full safety data by the end of 2021. The safety and effectiveness of HEPLISAV-B in adults 
on hemodialysis have not yet been established. This study alone, regardless of results, may not be sufficient to support a label 
change to include dialysis. 

Commercialization of HEPLISAV-B 

Dynavax has worldwide commercial rights to HEPLISAV-B. There are three other vaccines approved for the 
prevention of hepatitis B in the U.S.: Engerix-B and Twinrix® from GlaxoSmithKline plc (“GSK”) and Recombivax-HB® 
from Merck & Co. (“Merck”). HEPLISAV-B is currently approved in the U.S. and the EU for the prevention of hepatitis B. 
We are also exploring additional territories where it would be commercially feasible to market HEPLISAV-B on our own or 
through third parties.  

Based on 2019 data, we estimate that the current total U.S. market opportunity for HEPLISAV-B net sales is 
approximately $400 million annually, excluding what we believe are temporary COVID-related reductions in utilization of 
adult vaccines generally. We also believe that the market opportunity could increase to over $600 million annually when 
allowing for expanding adult immunization and coverage rates, increased second dose compliance, price increases over time 
and expansion of use in persons with diabetes. The largest segments of the market are concentrated in independent hospitals 
and clinics, integrated delivery networks, dialysis centers, public health clinics and prisons, the Departments of Defense and 
Veterans Affairs and retail pharmacies. Our promotional activity is focused on the largest accounts in each segment. We are 
currently targeting approximately 60% of hepatitis B vaccine sales in the U.S., with our field sales force of approximately 65 
people across 3 regions.  

8 

We are currently studying a four-dose regimen of HEPLISAV-B for patients on hemodialysis. If we receive approval 

of this dosing schedule, we expect to add dialysis centers to our personal promotion efforts, which could increase our 
coverage of the U.S. market to approximately 70%.   

In late 2012, the ACIP expanded its recommendation for adults who should be vaccinated against hepatitis B to include 
people with diabetes mellitus (type 1 and type 2). According to the CDC, in 2018, there are 20 million adults diagnosed with 
diabetes and another 1.5 million new cases diagnosed each year. This population represents a significant increase in the 
number of adults recommended for vaccination against hepatitis B in the U.S.  

The ACIP also is considering adoption of policy initiatives aimed at a universal adult recommendation and preferential 
use for HEPLISAV-B. Additional sources of potential growth in the market opportunity for HEPLISAV-B include improved 
second dose compliance and increases in adult immunization and coverage rates.  

VACCINES AND VACCINE ADJUVANTS  

Vaccines stimulate a person’s immune system to protect against a specific disease. Vaccines generally consist of a 

virus, bacteria or other pathogen, or a component, called an antigen, that can induce an immune response against that 
pathogen. Many antigens, including those used in recombinant subunit vaccines, are often poorly immunogenic and require 
additional components to help stimulate protective immunity based on antibodies and effector T cell functions. These 
additional components, called adjuvants, provide the help needed to enhance the immunogenicity of vaccine antigens. 
Adjuvants can increase the magnitude of an adaptive response to a vaccine and can guide the type of adaptive response to 
produce the most appropriate form of immunity for each specific pathogen.   

HEPLISAV-B and each of the vaccines it directly competes against use recombinant hepatitis B surface antigen 
(“rHBsAg” or “HBsAg”) to elicit an immune response to the virus. The other FDA approved HBV vaccines use aluminum as 
an adjuvant and we use CpG 1018, our proprietary Toll-Like Receptor 9 (“TLR9’) agonist adjuvant. In Phase 3 trials, 
HEPLISAV-B demonstrated faster and higher rates of protection and increased antibody titers and increased seroconversion 
rates in a general adult population and in adult populations with reduced responsiveness with two doses in one month 
compared to three doses over six months required for a competitor product containing alum, and it had a similar safety 
profile.  

CPG 1018 

The favorable immunogenicity and safety results achieved with CpG 1018 adjuvanted HEPLISAV-B support our 
efforts to develop CpG 1018 as a broadly useful vaccine adjuvant platform. CpG 1018 has an established profile for the 
potential development of safe and effective vaccines. CpG 1018 has a well-defined mechanism of action, targeting select 
immune system cells, with well-characterized effects on the immune response that mimic the immune response to naturally 
occurring TLR9 agonists in pathogens, resulting in potent adjuvant activity for antibody responses. In HEPLISAV-B, CpG 
1018 drives faster and consistently higher rates of seroprotection including in the elderly and populations known to be less 
responsive to other vaccines. CpG 1018 differentially elicits a preferred T Helper 1 (“Th1”) cell polarized response, driving 
both production of antibodies and T-cell activation. CpG 1018 has a large safety database indicating a favorable 
reactogenicity profile with lower reactogenicity compared to other adjuvants.  

We have established several clinical and preclinical collaborations with vaccine developers to evaluate CpG 1018 
adjuvanted vaccine product candidates against COVID-19, flu and other infectious diseases. Data from studies in non-human 
primates demonstrate CpG 1018 can elicit a robust immune response to COVID-19 and protect animals from infection in 
challenge studies. Initial results from Phase 1 human clinical studies demonstrated a CpG 1018 adjuvanted vaccine induced 
strong immune responses, including neutralizing antibodies and cell-mediated immunity and demonstrated a favorable safety 
and tolerability profile.  

Valneva Supply Agreement 

In April 2020, we entered into a collaboration agreement with Valneva to provide CpG 1018 adjuvant for use in the 
development of Valneva’s COVID-19 vaccine candidate, and in September 2020, we entered into a supply agreement with 
Valneva to manufacture and supply CpG 1018 adjuvant for use in the commercialization of Valneva's COVID-19 vaccine 
candidate. Under the supply agreement we will provide Valneva with CpG 1018 to produce 60 to 100 million doses of 
vaccine in 2021 and up to an additional 90 million doses through 2024 to support Valneva's contract with the U.K. 
government. Phase 1/2 clinical trials of the Valneva vaccine candidate were initiated in December 2020.  

9 

Serum Institute of India  

In June 2017, we entered into an agreement with Serum Institute of India Pvt. Ltd. (“SIIPL”) to collaborate on 
development and commercialization of certain potential vaccines. Our initial program is the development of an improved 
Tdap booster vaccine candidate adjuvanted with CpG 1018. A Phase 1 clinical trial began inJanuary 2021. Under the 
collaboration, Dynavax has exclusive worldwide rights to commercialize the vaccine, and SIIPL has exclusive rights to 
distribute in India and to fulfill WHO/UNICEF tender contracts. Each party is responsible for clinical development cost in 
their respective territories. 

Toll-like Receptor Immune Modulation Platform 

Toll-like receptors (“TLRs”) are a family of transmembrane proteins that play a vital role in innate immunity and 

subsequent adaptive immunity. Signaling through these receptors is triggered by the binding of a variety of pathogen-
associated molecules and is essential to generation of innate immunity. The innate immune response is, in effect, the first line 
of defense against viruses, bacteria and other potential pathogens. The innate response also initiates and regulates the 
generation of an adaptive immune response composed of highly specific antibodies and T cells. Our work has been focused 
primarily on stimulation of a subset of TLRs that have evolved to recognize bacterial and viral nucleic acids. This work 
resulted in the identification of proprietary synthetic oligonucleotides (short segments of DNA), that mimic the activity of 
microbial DNA and selectively activate one of these important receptors, TLR9. These are called CpG oligonucleotides – 
“CpGs” for short – referring to the presence of specific nucleotide sequences containing the CG base pair.  

Our vaccine research to date has focused on the use of TLR9 agonists as novel vaccine adjuvants. B-Class TLR9 

agonists, such as our CpG 1018 vaccine adjuvant, stimulate release of cytokines necessary for T cell activation and 
establishing long-term immunity. TLR9 stimulation also helps generate memory Th1 cells that can stimulate the immune 
system to induce long-lasting effects. As a result, TLR9 adjuvanted vaccines induce a specific Th1 immune response and 
durable levels of protective antibodies. 

INTELLECTUAL PROPERTY 

Our commercial success depends in part on our ability to obtain and maintain proprietary protection for our product 
candidates, technology and know-how, to operate without infringing the proprietary rights of others and to prevent others 
from infringing our proprietary rights. Generally, we seek patent protection in the U.S and foreign countries on a selective 
basis to further protect the inventions that we or our partners consider important to the development of our business. We also 
rely on trade secrets and contracts to protect our proprietary information.  

As of December 31, 2020, our intellectual property portfolio included over 25 issued U.S. patents, over 80 issued or 
granted foreign patents and over 25 additional owned or co-owned pending U.S. and foreign patent applications claiming 
compositions containing TLR agonists or antagonists, methods of use, and/or methods of manufacture thereof. Some of these 
patents and patent applications relate to our discontinued immuno-oncology programs. Reductions in counts, relative to prior 
years, are reflective of the assets we sold during 2020 following such discontinuation and other decisions we took consistent 
with our focus on our vaccine business. We have three issued U.S. patents relating to certain uses of HEPLISAV-B that 
expire in 2032.  

Individual patents extend for varying periods depending on the date of filing of the patent application or the date of 

patent issuance and the legal term of patents in the countries in which they are obtained. Generally, patents issued in the U.S. 
are effective for 20 years from the earliest effective filing date.  

In addition, in certain instances, a patent term can be extended to recapture a portion of the term effectively lost as a 

result of the FDA regulatory review period. The duration of patents varies in accordance with provisions of applicable local 
law, but typically is 20 years from the filing date. Our patent estate, based on patents existing now and expected by us to 
issue based on pending applications, will expire on dates ranging from 2021 to 2041. 

The actual protection afforded by a patent varies on a product-by-product basis, from country-to-country and depends 

upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory related extensions, 
the availability of legal remedies in a particular country and the validity and enforceability of the patents.  

Because patent applications in the U.S. and many foreign jurisdictions typically are not published until 18 months after 
filing and publications of discoveries in the scientific literature often lag behind actual discoveries, we cannot be certain that 
we were the first to file for protection of the inventions set forth in these patent applications or in our issued patents. Further, 
there could be proceedings such as inter partes review (IPR), post grant review (PGR), reexamination, or reissue which could 
result in claims in our patents being narrowed or even invalidated.  

10 

Our commercial success depends significantly on our ability to operate without infringing patents and proprietary 
rights of third parties. A number of pharmaceutical companies and biotechnology companies, as well as universities and 
research institutions, may have filed patent applications or may have been granted patents that cover inventions similar to the 
inventions owned by or licensed to us. We cannot determine with certainty whether patents or patent applications of other 
parties may materially affect our ability to make, use or sell any products. 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. The existence of third-party patent applications and patents could significantly reduce the coverage 
of the patents owned by or licensed to us and limit our ability to obtain meaningful patent protection. Litigation or any other 
proceedings could result in substantial costs to and diversion of effort by us, and an adverse outcome in a court or patent 
office could subject us to significant liabilities, require disputed rights to be licensed from other parties, or require us to cease 
using some of our technology. We may not prevail in these actions or proceedings, if any.  

In addition, other parties may duplicate, design around or independently develop similar or alternative technologies to 

ours or our licensors.  

We may rely, in some circumstances, on trade secrets and confidentiality agreements to protect our technology. 
Although trade secrets are difficult to protect, wherever possible, we use confidential disclosure agreements to protect the 
proprietary nature of our technology. Our policy is to require each of our commercial partners, employees, consultants and 
advisors to enter into an agreement before beginning their employment, consulting or advisory relationship with us that in 
general provides that the individuals must keep confidential and not disclose to other parties any of our confidential 
information developed or learned by the individuals during the course of their relationship with us except in limited 
circumstances. These agreements also generally provide that we own all inventions conceived by the individuals in the course 
of rendering their employment or services to us. However, there can be no assurance that these agreements will not be 
breached, that we will have adequate remedies for any breach, or that our trade secrets and/or proprietary information will not 
otherwise become known or be independently discovered by competitors. To the extent that our employees, consultants or 
contractors use intellectual property owned by others in their work for us, disputes may also arise as to the rights in related or 
resulting know-how and inventions.   

COMPETITION  

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense 
competition and a strong emphasis on proprietary products. Our products and development programs compete with several 
commercially available vaccine and adjuvant products. Many companies and institutions are making substantial investments 
in developing additional vaccines and adjuvants that could compete directly or indirectly with our marketed products and 
products under development by us and our collaborators.  

HEPLISAV-B, a two-dose in one month adult hepatitis B vaccine, competes directly with conventional three-dose over 

six months marketed vaccines Engerix-B from GSK, as well as Recombivax-HB marketed by Merck. There are also 
modified schedules of conventional hepatitis B vaccines for limited age ranges that are approved in the EU and the U.S. In 
addition, HEPLISAV-B competes against Twinrix, a bivalent vaccine marketed by GSK for protection against hepatitis B 
and hepatitis A. A three dose HBV vaccine manufactured by VBI Vaccines Inc. (“VBI”) is approved in Israel, and recently 
completed Phase 3 trials in the United States, Europe and Canada. While we believe that HEPLISAV-B competes very well 
with other approved vaccines available on the market, we are still a relatively new entrant and we face significant 
competition in our longer term goal to capture 60-70% of the U.S. market share. While we may explore additional territories 
outside of the U.S. and the EU to market HEPLISAV-B, in doing so we will likely face competition from these or other 
products and competitors. 

We are also in competition with companies developing vaccines, and vaccine adjuvants, generally, including, among 
others, GSK, Pfizer, Inc., Sanofi S.A., Merck, Seqirus, Agenus, Inc., Emergent BioSolutions, Inc., Novavax, Inc., Medicago 
Inc., Valneva, AstraZeneca plc, Moderna, Inc., Johnson & Johnson and VBI.  

Many of the entities developing or marketing these competing products have significantly greater financial resources 

and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory 
approvals and marketing than we do. Smaller or early-stage companies may also prove to be significant competitors, 
particularly through collaborative agreements with large, established companies with access to capital. These entities may 
also compete with us in recruiting and retaining qualified scientific and management personnel, as well as in acquiring 
technologies complementary to or necessary for our programs.  

11 

REGULATORY CONSIDERATIONS  

Government Regulation 

The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose extensive 

requirements upon the clinical development, pre-market approval, manufacture, labeling, marketing, promotion, pricing, 
import, export, storage and distribution of biopharmaceuticals. These agencies and other regulatory agencies regulate 
research and development activities and the testing, approval, manufacture, quality control, safety, effectiveness, labeling, 
storage, recordkeeping, advertising and promotion of drugs and biologics. Failure to comply with applicable FDA or foreign 
regulatory agency requirements may result in warning letters, fines, civil or criminal penalties, additional reporting 
obligations and/or agency oversight, suspension or delays in clinical development, recall or seizure of products, partial or 
total suspension of production or withdrawal of a product from the market.  

In the United States, the FDA regulates drug products under the Federal Food, Drug, and Cosmetic Act and its 
implementing regulations and biologics additionally under the Public Health Service Act. The process required by the FDA 
before biopharmaceuticals may be marketed in the United States generally involves the following:  

 

 

 

 

 

 

submission to the FDA of an IND, which must become effective before human clinical trials may begin and must 
be updated annually;  

completion of extensive pre-clinical laboratory tests and pre-clinical animal studies, all performed in accordance 
with the FDA’s Good Laboratory Practice (“GLP”), regulations;  

performance of adequate and well controlled human clinical trials to establish the safety and efficacy of the 
product for each proposed indication;  

submission to the FDA of a new drug application or a biologics license application, NDA or BLA, depending on 
the nature of the product after completion of all pivotal clinical trials to demonstrate the safety, purity and potency 
of the product for the indication for use;  

a determination by the FDA to accept the application for review;  

satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities to assess compliance 
with the FDA’s current good manufacturing practices (“cGMP”) regulations for pharmaceuticals; and  

  FDA review and approval of an NDA or BLA prior to any commercial marketing or sale of the product in the 

United States.  

The development and approval process requires substantial time, effort and financial resources, and we cannot be 
certain that any approvals for our product candidates, or those of our collaborators, will be granted on a timely basis, if at all.  

The results of pre-clinical tests (which include laboratory evaluation as well as GLP studies to evaluate toxicity in 

animals) for a particular product candidate, together with related manufacturing information and analytical data, are 
submitted as part of an IND to the FDA. The IND automatically becomes effective 30 days after receipt by the FDA, unless 
the FDA, within the thirty-day time period, raises concerns or questions about the conduct of the proposed clinical trial, 
including concerns that human research subjects will be exposed to unreasonable health risks. In such a case, the IND 
sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. IND submissions may not 
result in FDA authorization to commence a clinical trial. A separate submission to an existing IND must also be made for 
each successive clinical trial conducted during product development. Further, an independent institutional review board, or 
IRB, for each medical center proposing to conduct the clinical trial must review and approve the plan for any clinical trial 
before it commences at that center and it must monitor the study until completed. The FDA, the IRB or the sponsor may 
suspend a clinical trial at any time on various grounds, including a finding that the subjects or patients are being exposed to 
an unacceptable health risk. Clinical testing also must satisfy extensive good clinical practice (“GCP”) regulations and 
regulations for informed consent and privacy of individually identifiable information. 

12 

Clinical Trials. For purposes of an NDA or BLA submission and approval, clinical trials are typically conducted in the 

following sequential phases, which may overlap:  

  Phase 1. Studies are initially conducted in a limited population to test the product candidate for safety, dose 

tolerance, absorption, distribution, metabolism, and excretion, typically in healthy humans, but in some cases in 
patients.  

  Phase 2. Studies are generally conducted in a limited patient population to identify possible adverse effects and 

safety risks, explore the initial efficacy of the product for specific targeted indications and to determine dose range 
or pharmacodynamics. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior 
to beginning larger and more expensive Phase 3 clinical trials.  

  Phase 3. These are commonly referred to as pivotal studies. When Phase 2 evaluations demonstrate that a dose 

range of the product is effective and has an acceptable safety profile, Phase 3 clinical trials are undertaken in large 
patient populations to further evaluate dosage, provide substantial evidence of clinical efficacy and further test for 
safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial centers.  

  Phase 4. The FDA may approve an NDA or BLA for a product candidate, but require that the sponsor conduct 

additional clinical trials to further assess the product after approval under a post-marketing commitment or post- 
marketing requirement. In addition, a sponsor may decide to conduct additional clinical trials after the FDA has 
approved a product. Post-approval trials are typically referred to as Phase 4 clinical trials.  

The results of biologic development, pre-clinical studies and clinical trials are submitted to the FDA as part of an NDA 
or BLA. Applications also must contain extensive manufacturing and control information. Applications must be accompanied 
by a significant user fee. Once the submission has been accepted for filing, the FDA’s goal is to review applications within 
ten months of submission or, if the application relates to an unmet medical need in a serious or life-threatening indication, 
eight months from submission. The review process is often significantly extended by FDA requests for additional 
information or clarification. The FDA will typically conduct a pre-approval inspection of the manufacturer to ensure that the 
product can be reliably produced in compliance with cGMPs and will typically inspect certain clinical trial sites for 
compliance with GCP. The FDA may refer the application to an advisory committee for review, evaluation and 
recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an 
advisory committee, but it typically follows such recommendations. The FDA may deny approval of an application by 
issuing a Complete Response Letter if the applicable regulatory criteria are not satisfied. A Complete Response Letter may 
require additional clinical data and/or trial(s), and/or other significant, expensive and time- consuming requirements related to 
clinical trials, pre-clinical studies or manufacturing. Approval may occur with boxed warnings on product labeling or Risk 
Evaluation and Mitigation Strategies, or REMS, which limit the labeling, distribution or promotion of a product. Once issued, 
the FDA may withdraw product approval if ongoing regulatory requirements are not met or if safety problems occur after the 
product reaches the market. In addition, the FDA may require testing, including Phase 4 clinical trials, and surveillance 
programs to monitor the safety effects of approved products which have been commercialized and the FDA has the power to 
prevent or limit further marketing of a product based on the results of these post-marketing programs or other information.  

Other Regulatory Requirements. Products manufactured or distributed pursuant to FDA approvals are subject to 

continuing regulation by the FDA, including recordkeeping, annual product quality review, payment of program user fees 
and reporting requirements. Adverse event experience with the product must be reported to the FDA in a timely fashion and 
pharmacovigilance programs to proactively look for these adverse events are mandated by the FDA. Manufacturers and their 
subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to 
periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory 
requirements, including cGMPs, which impose certain procedural and documentation requirements upon us and our third-
party manufacturers. Failure to comply with the statutory and regulatory requirements can subject a manufacturer to possible 
legal or regulatory action, such as suspension of manufacturing, seizure of product, injunctive action, additional reporting 
requirements and/or oversight by the agency, import alert or possible civil or criminal penalties. The FDA may also require 
us to recall a product from distribution or withdraw approval for that product.  

The FDA closely regulates the post-approval marketing and promotion of pharmaceuticals, including standards and 

regulations for direct-to-consumer advertising, dissemination of off-label information, industry-sponsored scientific and 
educational activities and promotional activities involving the Internet, including certain social media activities. Further, if 
there are any modifications to the product, including changes in indications, labeling, or manufacturing processes or facilities, 
we may be required to submit and obtain FDA approval of a new or supplemental application, which may require us to 
develop additional data or conduct additional pre-clinical studies and clinical trials. Failure to comply with these 
requirements can result in adverse publicity, warning letters, corrective advertising and potential administrative, civil and 
criminal penalties, as well as damages, fines, withdrawal of regulatory approval, the curtailment or restructuring of our 
operations, the exclusion from participation in federal and state healthcare programs, additional reporting requirements and/or 
oversight by the agency, and imprisonment, any of which could adversely affect our ability to sell our products or operate our 
business and also adversely affect our financial results.   

13 

Physicians may, in their independent medical judgment, prescribe legally available pharmaceuticals for uses that are 

not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses 
are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many 
patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The 
FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use. Additionally, a 
significant number of pharmaceutical companies have been the target of inquiries and investigations by various U.S. federal 
and state regulatory, investigative, prosecutorial and administrative entities in connection with the promotion of products for 
off-label uses and other sales practices. These investigations have alleged violations of various U.S. federal and state laws 
and regulations, including claims asserting antitrust violations, violations of the Food, Drug and Cosmetic Act, false claims 
laws, the Prescription Drug Marketing Act, or PDMA, anti-kickback laws, and other alleged violations in connection with the 
promotion of products for unapproved uses, pricing and Medicare and/or Medicaid reimbursement. If our promotional 
activities, including any promotional activities that a contracted sales force may perform on our behalf, fail to comply with 
these regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. In addition, 
our failure to follow FDA rules and guidelines relating to promotion and advertising may cause the FDA to issue warning 
letters or untitled letters, suspend or withdraw an approved product from the market, require corrective advertising or a recall 
or institute fines or civil fines, additional reporting requirements and/or oversight or could result in disgorgement of money, 
operating restrictions, injunctions or criminal prosecution, any of which could harm our business.  

Outside the United States, the ability of our partners and us to market a product is contingent upon obtaining marketing 

authorization from the appropriate regulatory authorities. The requirements governing marketing authorization, pricing and 
reimbursement vary widely from country to country and region to region.  

Healthcare Fraud and Abuse Laws. As a pharmaceutical company, certain federal and state healthcare laws and 
regulations pertaining to fraud and abuse and patients’ rights may be applicable to our business. We may be subject to 
various federal and state laws targeting fraud and abuse in the healthcare industry. For example, in the United States, there 
are federal and state anti-kickback laws that prohibit the payment or receipt of kickbacks, bribes or other remuneration 
intended to induce the purchase or recommendation of healthcare products and services or reward past purchases or 
recommendations. These laws are applicable to manufacturers of products regulated by the FDA, such as us, and pharmacies, 
hospitals, physicians and other potential purchasers of such products.  

The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or 
paying remuneration, directly or indirectly, to induce either the referral of an individual, or the furnishing, recommending, or 
arranging for a good or service, for which payment may be made, in whole or in part, under a federal healthcare program, 
such as the Medicare and Medicaid programs. The term “remuneration” is defined as any remuneration, direct or indirect, 
overt or covert, in cash or in kind, and has been broadly interpreted to include anything of value, including for example, gifts, 
discounts, the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payment, ownership 
interests and providing anything at less than its fair market value. Several courts have interpreted the statute’s intent 
requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal 
healthcare covered business, the statute may have been violated, and enforcement will depend on the relevant facts and 
circumstances. The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education 
Reconciliation Act of 2010, or collectively the ACA, among other things, amended the intent requirement of the federal Anti-
Kickback Statute to state that a person or entity need not have actual knowledge of this statute or specific intent to violate it 
in order to have committed a violation. In addition, the ACA provides that the government may assert that a claim including 
items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for 
purposes of the False Claims Act (discussed below) or the civil monetary penalties statute, which imposes penalties against 
any person who is determined to have presented or caused to be presented a claim to a federal health program that the person 
knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or to have offered 
improper inducements to federal health care program beneficiaries to select a particular provider or supplier. The federal 
Anti-Kickback Statute is broad, and despite a series of narrow statutory exceptions and regulatory safe harbors, prohibits 
many arrangements and practices that are lawful in businesses outside of the healthcare industry. Many states have also 
adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items 
or services reimbursed by any source, not only the Medicare and Medicaid programs, and do not contain identical safe 
harbors. In addition, where such activities involve foreign government officials, they may also potentially be subject to the 
Foreign Corrupt Practices Act. Because of the breadth of these laws and the narrowness of the statutory exceptions and 
regulatory safe harbors available, it is possible that some of our business activities, including our activities with physician 
customers, pharmacies, and patients, as well as our activities pursuant to partnerships with other companies and pursuant to 
contracts with contract research organizations, could be subject to challenge under one or more of such laws.  

14 

The federal criminal and civil false claims laws, including the False Claims Act, which prohibits any person from 
knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, 
using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal 
government. A claim includes “any request or demand” for money or property presented to the U.S. government. In addition, 
the ACA specified that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute 
constitutes a false or fraudulent claim for purposes of the False Claims Act. The False Claims Act has been the basis for 
numerous enforcement actions and settlements by pharmaceutical and other healthcare companies in connection with various 
alleged financial relationships with customers. In addition, a number of pharmaceutical manufacturers have reached 
substantial financial settlements in connection with allegedly causing false claims to be submitted because of the companies’ 
marketing of products for unapproved, and thus non-reimbursable, uses. Certain marketing practices, including off-label 
promotion, may also violate false claims laws, as might violations of the federal physician self-referral laws, such as the Stark 
laws, which prohibit a physician from making a referral to certain designated health services with which the physician or the 
physician’s family member has a financial interest and prohibit submission of a claim for reimbursement pursuant to the 
prohibited referral. The “qui tam” provisions of the False Claims Act allow a private individual to bring civil actions on 
behalf of the federal government alleging that the defendant has submitted a false claim to the federal government, and to 
share in any monetary recovery. In addition, various states have enacted similar fraud and abuse statutes or regulations, 
including, without limitation, false claims laws analogous to the False Claims Act that apply to items and services reimbursed 
under Medicaid and other state programs, or, in several states, apply regardless of the payor.  

Separately, there are a number of other fraud and abuse laws that pharmaceutical manufacturers must be mindful of, 
particularly after a product candidate has been approved for marketing in the United States. For example, a federal criminal 
law enacted as part of, the Health Insurance Portability and Accountability Act of 1996, or HIPAA, prohibits, among other 
things, knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party 
payors. The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or 
making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare 
benefits, items or services. There are also federal and state consumer protection and unfair competition laws, which broadly 
regulate marketplace activities and activities that potentially harm consumers.  

Healthcare Privacy and Security Laws. We may be subject to, or our marketing activities may be limited by, HIPAA, 

as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their 
respective implementing regulations, which established uniform standards for certain “covered entities” (certain healthcare 
providers, health plans and healthcare clearinghouses) governing the conduct of certain electronic healthcare transactions and 
protecting the security and privacy of protected health information. Among other things, HIPAA’s privacy and security 
standards are directly applicable to “business associates” — independent contractors or agents of covered entities that create, 
receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a 
covered entity. In addition to possible civil and criminal penalties for violations, HITECH created new tiers of civil monetary 
penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state 
attorneys general authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek 
attorney’s fees and costs associated with pursuing federal civil actions. State laws also govern the privacy and security of 
health information in certain circumstances, many of which differ from each other in significant ways and may not have the 
same effect, thus complicating compliance efforts. Further, we are required to comply with international personal data 
protection laws and regulations, particularly as the result of our operations in Düsseldorf, Germany.  

Privacy and Security Laws. We are subject to diverse laws and regulations relating to data privacy and security, 
including, in the United States, HIPAA and, in the EU and the European Economic Area, or EEA, the GDPR (Regulation 
2016/679). New privacy rules are being enacted in the United States and globally, and existing ones are being expanded, 
updated and strengthened. 

Effective May 25, 2018, the EU implemented the General Data Protection Regulation (“GDPR”) a broad data 

protection framework that expands the scope of current EU data protection law to non-EU entities that process, or control the 
processing of, the personal information of EU subjects, including clinical trial data. The GDPR implements more stringent 
operational requirements than its predecessor legislation.  

Further, the Court of Justice of the EU ruled in July 2020 that the Privacy Shield, used by thousands of companies to 
transfer data between the EU and United States, was invalid and could no longer be used. In September 2020, Switzerland 
concluded that the Swiss-U.S. Privacy Shield Framework does not provide an adequate level of protection for data transfers 
from Switzerland to the United States. Alternative transfer mechanisms may be used, including the standard contractual 
clauses (“SCCs”), while the authorities interpret the decisions and scope of the invalidated Privacy Shield, but the SCCs have 
also been called into question in the same ruling that invalidated Privacy Shield.   

15 

Additionally, Brexit took effect in January 2020, which will lead to further legislative and regulatory changes. While 
the Data Protection Act of 2018, that “implements” and complements the GDPR achieved Royal Assent on May 23, 2018 
and is now effective in the United Kingdom, it is still unclear whether transfer of data from the EEA to the United Kingdom 
will remain lawful in the long term under GDPR. With the expiry of the transition period on December 31, 2020, companies 
will have to comply with the GDPR and the GDPR as incorporated into United Kingdom national law, which has the ability 
to separately fine up to the greater of £17.5 million or 4% of global turnover. The relationship between the United Kingdom 
and the EU in relation to certain aspects of data protection law remains unclear, for example around how data can lawfully be 
transferred between each jurisdiction, which exposes us to further compliance risk. We may incur liabilities, expenses, costs, 
and other operational losses under GDPR and applicable EU Member States and the United Kingdom privacy laws in 
connection with any measures we take to comply with them. 

Also, in June 2018, the State of California enacted the California Consumer Privacy Act of 2018 (“CCPA”), which 

became effective in January 2020. The CCPA establishes a privacy framework for covered businesses, including an 
expansive definition of personal information and data privacy rights for California residents. The CCPA includes a 
framework with potentially severe statutory damages and private rights of action. The CCPA requires covered companies to 
provide new disclosures to California consumers (as that word is broadly defined in the CCPA), provide such consumers new 
ways to opt-out of certain sales of personal information, and allow for a new cause of action for data breaches.  

Further, California voters approved a new privacy law, the California Privacy Rights Act, or CPRA, in the November 

3, 2020 election. Effective starting on January 1, 2023, the CPRA will significantly modify the CCPA, including by 
expanding consumers’ rights with respect to certain sensitive personal information. The CPRA also creates a new state 
agency that will be vested with authority to implement and enforce the CCPA and the CPRA. 

“Sunshine” and Marketing Disclosure Laws. There are an increasing number of federal and state “sunshine” laws that 
require pharmaceutical manufacturers to make reports to states on pricing and marketing information. Several states and local 
jurisdictions have enacted legislation requiring pharmaceutical companies to, among other things, establish marketing 
compliance programs, file periodic reports with the state, make periodic public disclosures on sales and marketing activities, 
register pharmaceutical sales representatives, and prohibiting certain other sales and marketing practices. In addition, a 
similar federal requirement, known as the Physician Payments Sunshine Act, requires manufacturers, including 
pharmaceutical manufacturers, to track and report annually to the federal government certain payments and other transfers of 
value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and other 
healthcare professionals and teaching hospitals and ownership or investment interests held by such physicians and their 
immediate family members. Beginning in 2022, applicable manufacturers also will be required to report such information 
regarding its payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, 
anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year. The 
federal government discloses the reported information on a publicly available website. Certain states, such as Massachusetts, 
also make the reported information publicly available. In addition, there are state and local laws that require pharmaceutical 
representatives to be licensed and comply with codes of conduct, transparency reporting, and other obligations. These laws 
may adversely affect our sales, marketing, and other activities with respect to our products in the United States by imposing 
administrative and compliance burdens on us. If we fail to track and report as required by these laws or otherwise comply 
with these laws, we could be subject to the penalty provisions of the pertinent state and federal authorities. 

Government Price Reporting. For those marketed products which are covered in the United States by the Medicaid 

programs, we have various obligations, including government price reporting and rebate requirements, which generally 
require products be offered at substantial rebates/discounts to Medicaid and certain purchasers (including “covered entities” 
purchasing under the 340B Drug Discount Program). We are also required to discount such products to authorized users of 
the Federal Supply Schedule of the General Services Administration, under which additional laws and requirements apply. 
These programs require submission of pricing data and calculation of discounts and rebates pursuant to complex statutory 
formulas, as well as the entry into government procurement contracts governed by the Federal Acquisition Regulations, and 
the guidance governing such calculations is not always clear. Compliance with such requirements can require significant 
investment in personnel, systems and resources, but failure to properly calculate our prices, or offer required discounts or 
rebates could subject us to substantial penalties. One component of the rebate and discount calculations under the Medicaid 
and 340B programs, respectively, is the “additional rebate,” a complex calculation which is based, in part, on the rate at 
which a branded drug price increases over time more than the rate of inflation (based on the CPI-U). This comparison is 
based on the baseline pricing data for the first full quarter of sales associated with a branded drug’s NDA, and baseline data 
cannot generally be reset, even on transfer of the NDA to another manufacturer. This “additional rebate” calculation can, in 
some cases where price increase has been relatively high versus the first quarter of sales of the NDA, result in Medicaid 
rebates up to 100 percent of a drug’s “average manufacturer price” and 340B prices of one penny.  

16 

Penalties. Because of the breadth of these laws and the narrowness of available statutory exception and regulatory safe 
harbors, it is possible that some of our business activities in the United States could be subject to challenge under one or more 
of such laws. Moreover, state governmental agencies may propose or enact laws and regulations that extend or contradict 
federal requirements. If we or our operations are found to be in violation of any of the state or federal laws described above 
or any other governmental regulations that apply to us, we may be subject to penalties, including significant civil, criminal 
and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in U.S. federal or 
state healthcare programs, additional reporting requirements and/or oversight, if subject to a corporate integrity agreement or 
similar agreement to resolve allegations of non-compliance with these laws, exclusion from participation in federal healthcare 
programs, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or 
restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could materially 
adversely affect our ability to operate our business and our financial results. Although compliance programs can mitigate the 
risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against 
us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and 
divert our management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with 
applicable federal and state privacy, security, sunshine, government price reporting, and fraud laws may prove costly.  

Impact of Healthcare Reform and Recent Public Scrutiny of Specialty Drug Pricing on Coverage, Reimbursement, and 
Pricing. In the United States and other potentially significant markets for our products, federal and state authorities as well as 
third-party payors are increasingly attempting to limit or regulate the price of medical products and services, particularly for 
new and innovative products and therapies, which has resulted in lower average net selling prices. Further, there is increased 
scrutiny of prescription drug pricing practices by federal and state lawmakers and enforcement authorities. In addition, there 
is an emphasis on managed healthcare in the United States, which will put additional pressure on product pricing, 
reimbursement and usage, which may adversely affect our future product sales and results of operations. These pressures can 
arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to 
Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general.  

The U.S. and some foreign jurisdictions are considering or have enacted a number of additional legislative and 

regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. 
Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in 
healthcare systems with the stated goals of containing healthcare costs (including a number of proposals pertaining to 
prescription drugs, specifically), improving quality and/or expanding access. For example, in Massachusetts, the MassHealth 
program has requested permission from the federal government to use commercial tools, such as a closed formulary, to 
negotiate more favorable rebate agreements from drug manufactures. There also has been particular and increasing legislative 
and enforcement interest in the United States with respect to specialty drug pricing practices, particularly with respect to 
drugs that have been subject to relatively large price increases over relatively short time periods. Such interest has resulted in 
several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other 
things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, 
reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. At the 
federal level, the Trump administration used several means to propose or implement drug pricing reform, including through 
federal budget proposals, executive orders and policy initiatives. For example, on July 24, 2020 and September 13, 2020, the 
Trump administration announced several executive orders related to prescription drug pricing that attempt to implement 
several of the administration’s proposals. The FDA also released a final rule, effective November 30, 2020, implementing a 
portion of the importation executive order providing guidance for states to build and submit importation plans for drugs from 
Canada. Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions 
from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, 
unless the price reduction is required by law. The implementation of the rule has been delayed by the Biden administration 
from January 1, 2022 to January 1, 2023 in response to ongoing litigation. The rule also creates a new safe harbor for price 
reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy 
benefit managers and manufacturers, the implementation of which have also been delayed pending review by the Biden 
administration until March 22, 2021. On November 20, 2020, CMS issued an interim final rule implementing President 
Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-
administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021. On 
December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction 
against implementation of the interim final rule. However, it is unclear whether the Biden administration will work to reverse 
these measures or pursue similar policy initiatives. At the state level, legislatures have increasingly passed legislation and 
implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient 
reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency 
measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. For example, in 
California, effective January 1, 2019, drug companies must notify insurers and government regulators of certain price 
increases and provide an explanation of the reasons for such increases.  

17 

In the United States, the pharmaceutical industry has already been significantly affected by major legislative initiatives, 

including, for example, the ACA. The ACA, among other things, imposes a significant annual fee on companies that 
manufacture or import branded prescription drug products. It also contains substantial provisions intended to broaden access 
to health insurance, reduce or constrain the growth of healthcare spending, and impose additional health policy reforms, any 
or all of which may affect our business.  

There remain judicial and Congressional challenges to certain aspects of the ACA, as well as recent efforts by the 

Trump administration to repeal or replace certain aspects of the ACA. Since January 2017, President Trump signed several 
Executive Orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise 
circumvent some of the requirements for health insurance mandated by the ACA. Concurrently, Congress considered 
legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed comprehensive 
repeal legislation, several bills affecting the implementation of certain taxes under the ACA have been signed into law. The 
Tax Cuts and Jobs Act of 2017 (the “Tax Act”) includes a provision repealing, effective January 1, 2019, the tax-based 
shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for 
all or part of a year that is commonly referred to as the “individual mandate”. In addition, the 2020 federal spending package 
permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored 
health coverage and medical device tax and, effective January 1, 2021, also eliminated the health insurer tax. The Bipartisan 
Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019, to increase from 50 
percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare 
Part D and close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” On December 14, 
2018, a Texas U.S. District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual 
mandate” was repealed by Congress as part of the Tax Act. Additionally, on December 18, 2019, the U.S. Court of Appeals 
for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case 
back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. The U.S. Supreme 
Court is currently reviewing this case, but it is unknown when a decision will be reached. Although the U.S. Supreme Court 
has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order to 
initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance 
coverage through the ACA marketplace. The executive order also instructs certain governmental agencies to review and 
reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid 
demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to 
obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how the Supreme Court ruling, 
other such litigation, and the healthcare reform measures of the Biden administration will impact the ACA and our business. 

Other legislative changes have also been proposed and adopted since the ACA was enacted. For example, the Budget 
Control Act of 2011 resulted in aggregate reductions in Medicare payments to providers of up to two percent per fiscal year, 
starting in 2013 and, due to subsequent legislative amendments to the statute, including the BBA, will remain in effect 
through 2030 unless additional Congressional action is taken. However, COVID-19 relief support legislation suspended the 
2% Medicare sequester from May 1, 2020 through March 31, 2021. In addition, the American Taxpayer Relief Act of 2012, 
among other things, reduced Medicare payments to several types of providers and increased the statute of limitations period 
for the government to recover overpayments to providers from three to five years. Such laws, and others that may affect our 
business that have been recently enacted or may in the future be enacted, may result in additional reductions in Medicare and 
other healthcare funding. 

MANUFACTURING 

We rely on our facility in Düsseldorf, Germany and third parties to perform the multiple processes involved in 
manufacturing HEPLISAV-B and our product candidates, including the manufacturing of TLR agonists, antigens, and the 
formulation, fill and finish of the resultant products. As is common in our industry in light of FDA inspection and licensing 
requirements for manufacturing sites, we have relied on a limited number of suppliers to produce products for clinical trials, 
conduct fill/finish operations, and a single supplier to produce our CpG 1018 adjuvant for HEPLISAV-B and for our 
collaborators. Switching suppliers, or bringing on additional suppliers, could be complicated and time consuming, but we 
generally seek to maintain inventory to help bridge any unexpected gap in supply. In order to help us successfully 
manufacture and commercialize HEPLISAV-B, we have secured long-term supply agreements with the key third-party 
suppliers and vendors for commercial supply of our component products and finished goods. To date, we have manufactured 
only small quantities of TLR agonists ourselves for development purposes. We currently manufacture the HBsAg for 
HEPLISAV-B at our Dynavax GmbH facility.  

18 

COMMITMENT TO COMPLIANCE AND ENVIRONMENT 

We are committed to conducting our business in compliance with all applicable legal and ethical standards. In addition, 

we are committed to helping to protect the environment.   

Our Ethics and Compliance program includes our Code of Business Conduct (“Code”), which sets forth our 

expectations of all Dynavax employees globally that they conduct their business activities in a legal and ethical manner. The 
Code can be found on our website under the header “Investor Relations” and within that under the header “Corporate 
Governance and Compliance.” We have a Chief Ethics and Compliance Officer, a Compliance Steering Committee and 
policies, procedures and training addressing specific aspects of our business, including advertising and promotion; 
engagements with healthcare providers; and regarding our business activities outside the United States to ensure they comply 
with the U.S. Foreign Corrupt Practices Act and all other applicable anti-corruption laws. We certify on an annual basis to 
having a comprehensive compliance program that meets the standards set forth under California law. This certification, 
which sets forth all of the elements of our healthcare compliance program, can be found on our web-site. 

We also care about the environment. To that end, our headquarters is in a building certified as “Gold” level on the 

LEED Scorecard as set forth by the United States Green Building Committee. Additionally, we offer incentives to our 
employees to utilize public transit in order to reduce traffic congestion and pollution and there is a free shuttle from our 
building to public transportation. We also have a policy to allow our employees to telecommute one or more days a week 
when our offices are not closed as a COVID-19 precautions, in which case our workforce is permitted be almost fully remote, 
depending on the nature of their role, which further helps reduce congestion and pollution. In addition, we have an active 
recycling program. We continue to consider other ways in which we can conduct our business in an environmentally friendly 
manner. 

We have made, and will continue to make, expenditures for environmental compliance and protection. We do not 

expect that expenditures for compliance with environmental laws will have a material effect on our results of operations in 
the future. 

Human Capital Resources 

As of December 31, 2020, we had 245 employees, comprised of 142 employees in the U.S., including 82 employees at 

our corporate headquarters in Emeryville, California and 60 field-based employees located throughout the U.S., as well as 
103 employees in our office and manufacturing facility in Düsseldorf, Germany. Many of our employees hold advanced 
degrees, including masters degrees and Pharm.D., Ph.D. or M.D. degrees. We consider the intellectual capital of our 
employees to be an essential driver of our business and key to our future prospects. None of our employees is subject to a 
collective bargaining agreement or represented by a trade or labor union. We consider our relations with our employees to be 
very good.  

Retention 

Historically, our annual turnover has typically been lower than the turnover in our industry. Our total turnover rate for 
2020 was 12.5% in the U.S. and less than 7% in Düsseldorf. As a vaccine-focused company, we face stiff competition to hire 
and retain our employees which is exacerbated by the current and intense global focus to develop and distribute a COVID-19 
vaccine, as market participants in the COVID-19 space grow their businesses and seek to do so by hiring professionals with 
vaccine experience in particular. The average tenure among our employees, is 5.6 years in Düsseldorf and 3.1 years in the 
U.S. 

Development 

Attracting and retaining top talent is key to the achievement of our strategic goals. The development and engagement 

of our employees is also a top priority of the human resources team, and in 2020, eighty of our global leaders and key 
contributors completed a seven-module leadership development program. In 2020, we implemented a new online recognition 
program in the U.S. and will expand the program to Düsseldorf in April 2021.   

19 

Response to COVID-19 

In response to the pandemic, we moved to a virtual working model in the U.S. and through work-from-home and 

creative scheduling efforts, we reduced the number of employees required to be onsite each day in our Düsseldorf 
manufacturing facility by approximately 50%. Our last employee survey in October 2020 revealed that 97.3% of U.S. based 
employees felt that their level of engagement was the same or higher than it was in February 2020, prior to the pandemic. 

Compensation 

We also monitor our compensation programs closely and provide what we consider to be a very competitive mix of 

compensation and insurance benefits for all our employees. Each of our employees participates in our equity programs. 

CORPORATE INFORMATION & AVAILABLE INFORMATION  

Our principal executive offices are located at 2100 Powell Street, Suite 900, Emeryville, California, 94608. Our 
telephone number is (510) 848-5100. We make available, free of charge on our website located at www.dynavax.com, our 
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those 
reports, as soon as reasonably practicable after filing such reports with the Securities and Exchange Commission (“SEC”). 
Alternatively, you may access these reports at the SEC’s website at www.sec.gov. The contents of our websites are not 
incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, 
and any references to our websites are intended to be inactive textual references only. 

ITEM 1A. 

RISK FACTORS 

Various statements in this Annual Report on Form 10-K are forward-looking statements concerning our future efforts 
to obtain regulatory approval, achieve restructuring goals, commercialize approved products, expenses, revenues, liquidity 
and cash needs, as well as our plans and strategies. These forward-looking statements are based on current expectations and 
we assume no obligation to update this information. Numerous factors could cause our actual results to differ significantly 
from the results described in these forward-looking statements, including the following risk factors.  

Risks Related to our Business and Capital Requirements 

HEPLISAV-B has been launched in the United States, and approved in the European Union, and there is significant 
competition in the marketplace. Since this is our first marketed product, the timing of uptake and distribution efforts are 
unpredictable and there is a risk that we may not achieve and sustain commercial success for HEPLISAV-B. 

We have established sales, marketing and distribution capabilities and commercialized HEPLISAV-B in the U.S. 
Successful commercialization of HEPLISAV-B will require significant resources and time and, while Dynavax personnel are 
experienced with respect to marketing of healthcare products, because HEPLISAV-B is the company’s first marketed product, 
the potential uptake of the product in distribution and the timing for growth in sales, if any, is unpredictable and we may not 
be successful in commercializing HEPLISAV-B. In particular, successful commercialization of HEPLISAV-B will require 
that we continue to negotiate and enter into contracts with wholesalers, distributors, group purchasing organizations, and 
other parties, and that we maintain those contractual relationships. There is a risk that we may not complete or maintain all of 
these important contracts on favorable terms or that in a potentially evolving reimbursement environment our efforts can 
overcome established competition at favorable pricing. 

We converted our contracted field sales team into full-time Dynavax employees in the second quarter of 2019. We 
have not previously employed an in-house field sales team, and thus have limited experience in overseeing and managing an 
employed salesforce. In addition, retention of capable sales personnel may be more difficult with a single product offering 
and we must retain our salesforce in order for HEPLISAV-B to establish a commercial presence.   

Moreover, we expect that significant resources will need to be invested in order to successfully market, sell and 

distribute HEPLISAV-B for use with diabetes patients, one of our targeted patient populations. Although the Centers for 
Disease Control and Prevention (“CDC”) and the CDC’s Advisory Committee on Immunization Practices (“ACIP”) 
recommend that patients with diabetes receive hepatitis B vaccinations, we are unable to predict how many of those patients 
may receive HEPLISAV-B.  

In addition to the risks with employing and maintaining our own commercial capabilities and with contracting, other 

factors that may inhibit our efforts to successfully commercialize HEPLISAV-B include: 

  whether we are able to recruit and retain adequate numbers of effective sales and marketing personnel; 

20 

  whether we are able to access key health care providers to discuss HEPLISAV-B; 

  whether we can compete successfully as a new entrant in established distribution channels for vaccine products; 

and 

  whether we will maintain sufficient funding to cover the costs and expenses associated with creating and 

sustaining a capable sales and marketing organization and related commercial infrastructure. 

If we are not successful, we may be required to collaborate or partner HEPLISAV-B with a third-party pharmaceutical 
or biotechnology company with existing products. To the extent we collaborate or partner, the financial value will be shared 
with another party and we will need to establish and maintain a successful collaboration arrangement, and we may not be able 
to enter into these arrangements on acceptable terms or in a timely manner in order to establish HEPLISAV-B in the market. 
To the extent that we enter into co-promotion or other arrangements, any revenues we receive will depend upon the efforts of 
third parties, which may not be successful and are only partially in our control. In that event, our product revenues may be 
lower than if we marketed and sold our products directly with the highest priority, and we may be required to reduce or 
eliminate much of our commercial infrastructure and personnel as a result of such collaboration or partnership. 

We are continuing to closely monitor the impact of the COVID-19 global pandemic on our business and are taking 

proactive efforts to protect the health and safety of our workforce, patients and healthcare professionals, and to continue our 
business operations and advance our goal of bringing important new vaccines to patients as rapidly as possible. We have 
implemented measures to protect the health and safety of our workforce, including a mandatory work-from-home policy for 
employees who can perform their jobs offsite. In the conduct of our business activities, we are also taking actions to protect 
the safety of patients and healthcare professionals. Our field-based personnel have mostly paused in-person customer 
interactions in healthcare settings and are generally using electronic communication, such as emails, phone calls and video 
conferences. Many health care and contracting professionals at hospitals and other medical institutions with whom our field-
based personnel interact are working a greater proportion of their working schedule from home and are facing additional 
demands on their time during the COVID-19 pandemic. We expect that the different quality of electronic interactions as 
compared with in-person interactions, as well as the reduced quantity of interactions during the COVID-19 pandemic, may 
reduce the effectiveness of our sales personnel, our customers’ procurement activities, as well as those of our collaborators, 
which could negatively affect our product sales. 

In addition, due to the ongoing COVID-19 global pandemic, most medical centers restricted access to their facilities 

and focused on providing care to only the most severely affected patients beginning in mid-March 2020. As states began 
phasing out restrictions in late May/early June, medical centers began operating under limited capacity and strict social 
distancing rules. This has resulted in significantly reduced utilization of adult vaccines since the end of the first quarter of 
2020, including HEPLISAV-B. This reduced utilization has significantly impacted sales and is likely to continue to impact us 
until restrictions affecting us are lifted and the U.S. returns to more normal conditions. 

If we, or our partners, if any, are not successful in setting our marketing, pricing and reimbursement strategies, 

recruiting and maintaining effective sales and marketing personnel or in building and maintaining the infrastructure to 
support commercial operations, we will have difficulty successfully commercializing HEPLISAV-B, which would adversely 
affect our business and financial condition.  

Our business and operations have been and may continue to be adversely affected by the evolving and ongoing COVID-19 
global pandemic. 

Our business has been and may continue to be adversely affected by the effects of the recent and evolving COVID-19 
virus, which was declared by the World Health Organization (“WHO”) as a global pandemic. The COVID-19 pandemic has 
resulted in travel and other restrictions in order to reduce the spread of the disease. In response to these public health 
directives and orders, we have implemented work-from-home policies for all employees, except those that need to be at work 
in order to perform critical responsibilities. 

The COVID-19 pandemic, and government measures taken in response, have had a significant impact, both direct and 

indirect, on businesses and commerce, as significant reductions in business-related activities have occurred, supply chains 
have been disrupted, and manufacturing and clinical development activities have been curtailed or suspended. In accordance 
with guidance issued by the Centers for Disease Control and Prevention, WHO and local authorities, beginning in March 
2020, most of our global workforce transitioned to working remotely. The principal purchasers of HEPLISAV-B, including 
independent hospitals and clinics, integrated delivery networks, public health clinics and prisons, the Departments of Defense 
and Veterans Affairs and retail pharmacies, have all drastically curtailed their day-to-day activities and ceased or significantly 
reduced allowing access to their facilities for non-COVID-19 related business. Thus, our field sales and medical science 
employees increased their use of telephone and web-based means to seek to carry out their roles where necessary, which may 
not be as effective as being in-person. 

21 

 
The overall impact has generally resulted in significantly reduced utilization of all adult vaccines, (other than recently 

approved COVID-19 vaccines) since the end of the first quarter of 2020, including HEPLISAV-B. This shift has significantly 
and adversely impacted our sales of HEPLISAV-B and our business and operating results since March 2020 and continues to 
pose a headwind for our HEPLISAV-B business. This reduced HEPLISAV-B utilization is likely to continue to impact us 
until restrictions affecting us are lifted and the U.S. returns to more normal conditions.  

We also cannot predict to what extent the COVID-19 pandemic may continue to disrupt demand for HEPLISAV-B, but 

the overall magnitude of the disruption to our business will depend, in part, on the length and ongoing severity of the 
restrictions, and other limitations on our ability to conduct our business in the ordinary course. Prolonged disruptions would 
likely materially and negatively impact our business, operating results and financial condition.  

Quarantines, shelter-in-place, executive and similar government orders related to COVID-19 have had no material 

impact on the supply of HEPLISAV-B and we have no current expectation that they will. However, if such restrictions 
continue for a substantial period of time, they could impact personnel at our manufacturing facility in Germany and third-
party manufacturing facilities in the United States. This could adversely affect our ability to maintain and distribute a 
consistent supply of HEPLISAV-B sufficient to meet demand. 

The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While the 

potential economic impact, and the duration of such impact, brought by COVID-19 may be difficult to assess or predict, a 
widespread pandemic could also potentially result in significant disruption of global financial markets, reducing our ability to 
access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting 
from the spread of COVID-19 could materially affect our business and the value of our common stock. 

The COVID-19 pandemic continues to rapidly evolve, and new variants of the virus have been discovered. While some 

vaccines have been recently approved, it is not clear whether, which, or to what extent these vaccines will protect against 
current or future variants of the virus. The extent to which the COVID-19 pandemic impacts our business, our future sales of 
HEPLISAV-B and revenue will depend on future developments that are highly uncertain and cannot be predicted with 
confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, quarantines, 
social distancing requirements and business closures in the United States and elsewhere, business disruptions and the 
effectiveness of actions taken in the United States and elsewhere to contain and treat the disease. Accordingly, we do not yet 
know the full extent of potential delays or impacts on our business, operations or the global economy as a whole. However, 
these impacts could continue to adversely impact our business, financial condition, results of operations and growth prospects.  

In addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it 

may also have the effect of heightening many of the other risks and uncertainties described elsewhere in this ‘‘Risk Factors’’ 
section. 

As we continue to focus on the commercialization of HEPLISAV-B and CpG 1018, we may encounter difficulties in 
managing our commercial growth and expanding our operations successfully. 

As our commercial operations expand, we expect that we will also need to manage additional relationships with various 

third parties, including sole source suppliers, distributors, wholesalers and hospital customers. Future growth, including 
managing an in-house field sales team, will impose significant added responsibilities on our organization, in particular on 
management. Our future financial performance and our ability to successfully commercialize HEPLISAV-B and CpG 1018, 
and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we may 
not be able to manage our growth efforts effectively, and hire, train and integrate additional management, administrative and 
sales and marketing personnel, or secure sufficient or timely supply from third party service providers, and our failure to 
accomplish any of these activities could prevent us from successfully growing our company. 

As we plan for broader commercialization of HEPLISAV-B and for expanded capacity to manufacture CpG 1018, our 
financial commitments to increase supply capacity might outpace actual demand for our products. 

As we plan to scale up production capabilities for HEPLISAV-B as well as production capabilities for our advanced 
adjuvant, CpG 1018, to support potential vaccine collaborations and response to COVID-19 and other initiatives, we have 
been, and in the future will be, required to make significant financial commitments to reserve manufacturing capacity at our 
contract manufacturing organizations (“CMOs”). Under ordinary circumstances we would make these commitments close in 
time and with some level of certainty that we have customers making similar commitments to us. Because of long lead times 
on manufacturing, uncertainty about who will ultimately buy CpG 1018 from us and in what quantities, if any, as well as the 
need to book manufacturing capacity in advance, the financial commitments we make to our CMOs to support manufacturing 
may not be recovered in its entirety, or at all, if our collaborators do not ultimately purchase from us. Capacity reservation 
fees are generally not recoverable if we do not use the capacity we have reserved as a result of lower than expected demand, 
or otherwise. As a result, we could end up making financial commitments that we never recover if demand for CpG 1018 
does not materialize in the volumes we are expecting, or at all. 

22 

We rely on our facility in Düsseldorf, Germany and third parties to supply materials or perform processes necessary to 
manufacture HEPLISAV-B and our product candidates. We rely on a limited number of suppliers to produce the 
oligonucleotides we require for development and commercialization. Additionally, we have limited experience in 
manufacturing our product candidates in commercial quantities. With respect to HEPLISAV-B, we have switched to a 
pre-filled syringe presentation of the vaccine and our ability to meet future demand will depend on our ability to 
manufacture sufficient supply in this presentation. 

We rely on our facility in Düsseldorf and third parties to perform the multiple processes involved in manufacturing 
HEPLISAV-B surface antigens, the combination of the oligonucleotide and the antigens, and formulation, fill and finish. The 
FDA approved our pre-filled presentation of HEPLISAV-B in 2018 and we expect such presentation will be the sole 
presentation for HEPLISAV-B going forward. We have limited experience in manufacturing and supplying this presentation 
and rely on a contract manufacturer to do so. Our contract manufacturer is the only approved provider that we have, and there 
can be no assurance that we or they can successfully manufacture sufficient quantities of pre-filled syringes in compliance 
with GMP in order to meet market demand.  

We have also relied on a limited number of suppliers to produce oligonucleotides for clinical trials and a single supplier 

to produce our CpG 1018 for HEPLISAV-B and our pre-filled syringe presentation. To date, we have manufactured only 
small quantities of oligonucleotides ourselves for development purposes. If we were unable to maintain our existing supplier 
for CpG 1018, we would have to establish an alternate qualified manufacturing capability, which would result in significant 
additional operating costs and delays in manufacturing HEPLISAV-B and developing and commercializing our product 
candidates. We or other third parties may not be able to produce product at a cost, quantity and quality that are available from 
our current third-party suppliers or at all. 

In countries outside of the U.S., we may not be able to comply with ongoing and comparable foreign regulations, and 

our manufacturing process may be subject to delays, disruptions or quality control/quality assurance problems. 
Noncompliance with these regulations or other problems with our manufacturing process may limit or disrupt the 
commercialization of HEPLISAV-B or our other product candidates and could result in significant expense.  

We have entered into collaborative relationships to develop vaccines utilizing CpG 1018, including collaborations to 
develop a vaccine for COVID-19. These collaborations may not be successful. If the combination of patents, trade secrets 
and other proprietary rights that we rely on to protect our intellectual property rights in CpG 1018 are inadequate; we may 
be unable to realize any commercial benefit from the development of a vaccine containing CpG 1018. 

As part of our business, we are working to develop our novel adjuvant, CpG 1018, as a premier vaccine adjuvant 
through research collaborations and partnerships. Current collaborations are focused on adjuvanted vaccines for COVID-19, 
pertussis and universal influenza. There are risks and uncertainties inherent in vaccine research and development, including 
the timing of completing vaccine development, the results of clinical trials, whether the vaccine will be approved for use, the 
extent of competition, and whether a vaccine can be successfully commercialized. As a result, these collaborative efforts may 
not be as successful as we expect, or at all.  

In addition, our collaborators have primary responsibility for the development, conduct of clinical trials, and for 
seeking and obtaining regulatory approval of potential vaccines, including any potential vaccine for COVID-19 containing 
CpG 1018. We have limited or no control over our collaborators’ decisions, including the amount and timing of resources 
that any of these collaborators will dedicate to such activities. If a collaborative partner fails to conduct collaborative 
activities successfully, the development of a vaccine could be delayed, and may not occur at all. We also rely on a single 
supplier to produce CpG 1018. If we were unable to maintain our existing supplier for CpG 1018, we would have to establish 
an alternate qualified manufacturing capability, which would result in significant additional operating costs and delays in 
developing and commercializing any potential adjuvanted vaccines by our third-party collaborators. We or other third parties 
may not be able to produce CpG 1018 at a cost, quantity and quality similar to that available from our current third-party 
supplier, or at all, and even if we add an additional supplier, there is no guarantee such supplier will be able to manufacture 
supplemental quantities sufficient to support commercial demand to the extent it materializes and in the timeframes required. 

CpG 1018 has no composition of matter patent protection. We have filed patent applications claiming compositions 

and methods of use of CpG 1018 for COVID-19 and other vaccines. In addition, we rely on trade secret protection and 
confidentiality and other agreements to protect our interests in proprietary know-how related to CpG 1018. If we are unable 
to adequately obtain or enforce our proprietary rights relating to CpG 1018, we may be unable to realize any commercial 
benefit from the development of a vaccine containing CpG 1018, and we may not have the ability to prevent others from 
developing or commercializing a vaccine containing CpG 1018. Disputes or litigation may also arise with our collaborators 
(with us and/or with one or more third parties), including those over ownership rights to intellectual property, know-how or 
technologies developed with our collaborators. 

23 

We face uncertainty regarding coverage, pricing and reimbursement and the practices of third-party payors, which may 
make it difficult or impossible to sell our product or product candidates on commercially reasonable terms. 

In both domestic and foreign markets, our ability to achieve profitability will depend in part on the negotiation of a 
favorable price, as well as the availability of coverage and adequate reimbursement, from third-party payors, in particular for 
HEPLISAV-B, where existing products are already marketed. In the U.S., pricing for hepatitis B vaccines is currently stable 
and reimbursement is favorable as we believe private and public payors recognize the value of prophylaxis in this setting 
given the high costs of potential morbidity and mortality, and we have achieved coverage with most third-party payors. 
However, there is a risk that some payors may limit coverage to specific products on an approved list, also known as a 
formulary, which might not include HEPLISAV-B. Thus, there can be no assurance that HEPLISAV-B will achieve and 
sustain stable pricing and favorable reimbursement. 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 HEPLSIAV-B sufficient to 
achieve profitability, and future acceptance of such pricing.  

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. Because we intend to offer products, if approved, that involve new technologies and new 
approaches to treating disease, the willingness of third-party payors to reimburse for our products is uncertain. We will have 
to charge a price for our products that is sufficient to enable us to recover our considerable investment in product 
development and our operating costs. Adequate third-party payor reimbursement may not be available to enable us to 
maintain price levels sufficient to achieve profitability, and such unavailability could harm our future prospects and reduce 
our stock price. 

We have applied for, and in some cases have received, grants to help fund the scale-up of CpG 1018 production, and such 
grants, if and when received, may involve pricing or other restrictions. 

In order to help fund potential scale-up of production of CpG 1018 that may be required in the event that CpG 1018 is 

included in any approved and commercially-available novel vaccine, whether a COVID-19 vaccine or otherwise, we have 
applied for, and in some cases have received grants from various charitable and philanthropic organizations, including from 
Bill and Melinda Gates Foundation. These grants and others, if and when received, may come with certain pricing 
requirements, global access requirements or reporting or other covenants to ensure that any funded product is made available 
by us worldwide and on a nondiscriminatory basis. Such covenants may limit the price we can charge for any funded product 
and may involve a license to use technology we own that is included in the funded products if we do not comply. Such price 
limitations or licenses, if invoked, could serve to limit the prices we charge, or in some cases, our control over the 
manufacturing and distribution of grant-funded products. Failure to agree with such requirements, may result in the company 
not receiving some or all of the grant. 

We implemented a strategic restructuring to prioritize our vaccine business and explore strategic alternatives for our 
immuno-oncology portfolio, and we cannot assure you that we will be able to successfully execute on a strategic 
alternative for our immuno-oncology portfolio. 

In the second quarter of 2019, we implemented a strategic restructuring that would focus our efforts on HEPLISAV-B, 
which included a reduction in our workforce and operations to focus resources on HEPLISAV-B commercialization and sales 
execution as well as assess additional opportunities to leverage our CpG 1018 adjuvant. We recently announced the sale of 
assets related to our SD-101 program. Additionally, we are seeking strategic alternatives for of the remaining assets in our 
immuno-oncology portfolio, including our development stage product DV281. In connection with the restructuring, we made 
the determination to wind down ongoing immuno-oncology trials. Our ability to successfully execute on a strategic 
alternative for the assets that remain in our immuno-oncology portfolio is dependent on a number of factors and we may not 
be able to execute upon a transaction or other strategic alternative for our immuno-oncology assets upon favorable terms 
within an advantageous timeframe and recognize significant value for these assets, if at all. Additionally, the negotiation and 
consummation of a transaction or other strategic alternative involving our immuno-oncology assets may be costly and time-
consuming. Our strategic restructuring may not result in anticipated savings or other economic benefits, could result in total 
costs and expenses that are greater than expected, could make it more difficult to attract and retain qualified personnel and 
may disrupt our operations, each of which could have a material adverse effect on our business. 

24 

 
We are subject to ongoing FDA 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 problems with HEPLISAV-B. 

Our HEPLISAV-B regulatory approval in the United States is subject to certain post-marketing obligations and 
commitments to the FDA. For example, we must conduct an observational comparative study of HEPLISAV-B to Energix-B 
to assess occurrence of acute myocardial infarction, or AMI. This study was initiated in August 2018, and concluded in 
November 2020. We must also conduct an observational surveillance study to evaluate the incidence of new onset immune-
mediated diseases, herpes zoster and anaphylaxis; and we are required to establish a pregnancy registry to provide 
information on outcomes following pregnancy exposure to HEPLISAV-B. These studies will require significant effort and 
resources, and failure to timely conduct these studies or complete these studies to the satisfaction of the FDA could result in 
withdrawal of our BLA approval, which would have a material adverse effect on our business, results of operations, financial 
condition and prospects. The results of post-marketing studies may also result in additional warnings or precautions for the 
HEPLISAV-B label or expose additional safety concerns that may result in product liability and withdrawal of the product 
from the market, any of which would have a material adverse effect on our business, results of operations, financial condition 
and prospects.   

In December 2019, we filed with the FDA a cumulative report on both interim analyses of the ongoing observational 
comparative AMI study. The interim analyses were based on currently-available data, and the final results, related findings 
and conclusions of the study will not be known until its completion and the receipt and review of the complete study data. 
Interim results may not be reproduced in the future, and thus should be considered carefully and not relied upon as indicative 
of future study results. Material adverse differences in final data, compared to interim data, could significantly adversely 
affect our business and business prospects, including our future HEPLISAV-B business. Certain assumptions, estimations, 
calculations and conclusions may have been made in connection with the interim analyses of the study data, and others, 
including regulatory agencies, may not accept or agree with these assumptions, estimations, calculations or conclusions, or 
may interpret or weigh the importance of data differently, which could impact the actual or perceived value of the study, 
HEPLISAV-B or the Company in general. 

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. 
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as 
continued compliance with current good manufacturing practices (“cGMP”), good clinical practices (“GCP”), ICH 
guidelines, and good laboratory practices (“GLP”). If we are not able to meet and maintain regulatory compliance, we may 
lose marketing approval and be required to withdraw our product. Withdrawal of our product would have a material adverse 
effect on our business. 

If HEPLISAV-B or any products we develop are not accepted by the market or if regulatory agencies limit our labeling 
indications, require labeling content that diminishes market uptake of HEPLISAV-B or any other products we develop, or 
limits our marketing claims, we may be unable to generate significant revenues, if any. 

Even if we obtain regulatory approval for our product candidates, such as the U.S. and European 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. 

The degree of market acceptance of HEPLISAV-B and any of our future approved products will depend upon a number 

of factors, including: 

 

 

 

 

 

 

 

the indication for which the product is approved and its approved labeling; 

the presence of other competing approved therapies; 

the potential advantages of the product over existing and future treatment methods; 

the relative convenience and ease of administration of the product; 

the strength of our sales, marketing and distribution support; 

the price and cost-effectiveness of the product; and 

third-party coverage and adequate reimbursement and the willingness of patients to pay out-of-pocket in the 
absence of sufficient reimbursement by third-party payors.  

25 

The FDA or other regulatory agencies could limit the labeling indication for which our product candidates may be 

marketed or could otherwise limit marketing efforts for our products. If we are unable to achieve approval or successfully 
market any of our product candidates, or marketing efforts are restricted by regulatory limits, our ability to generate revenues 
could be significantly impaired. 

Many of our competitors have greater financial resources and expertise than we do. If we are unable to successfully 
compete with existing or potential competitors as a result of these disadvantages, we may be unable to generate sufficient 
or any revenues and our business will be harmed. 

We compete with pharmaceutical companies, biotechnology companies, academic institutions and research 

organizations, in developing and marketing vaccines and adjuvants. For example, HEPLISAV-B competes in the U.S. with 
established hepatitis B vaccines marketed by Merck and GlaxoSmithKline plc (“GSK”) and if approved outside the U.S., 
with vaccines from those companies as well as several additional established pharmaceutical companies. There are also 
modified schedules of conventional hepatitis B vaccines for limited age ranges that are approved in the European Union and 
United States. In addition, HEPLISAV-B competes against Twinrix, a bivalent vaccine marketed by GSK for protection 
against hepatitis B and hepatitis A. A three dose HBV vaccine manufactured by VBI Vaccines Inc. (“VBI”) is approved in 
Israel, and recently completed Phase 3 trials in the United States, Europe and Canada. 

We are also in competition with companies developing vaccines and vaccine adjuvants, generally, including, among 

others, GSK, Pfizer, Inc., Sanofi S.A., Merck, Seqirus, Agenus, Inc., Emergent BioSolutions, Inc., Novavax, Inc., Medicago 
Inc., Valneva, AstraZeneca plc, Moderna, Inc., Johnson & Johnson and VBI.  

Existing and potential competitors may also compete with us for qualified commercial, scientific and management 

personnel, as well as for technology that would otherwise be advantageous to our business. 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. 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 obtain 
financing, enter into collaborative arrangements, sell our product candidates or generate revenues. 

We have incurred net losses in each year since our inception and anticipate that we will continue to incur significant 
losses for the foreseeable future unless we can successfully commercialize HEPLISAV-B and CpG 1018, and if we are 
unable to achieve and sustain profitability, the market value of our common stock will likely decline. 

We have generated limited revenue from the sale of products and have incurred losses in each year since we 
commenced operations in 1996. Our net losses for the year ended December 31, 2020 and 2019 were $75.2 million and 
$152.6 million, respectively. As of December 31, 2020, we had an accumulated deficit of $1.3 billion. 

With our investment in the launch and commercialization of HEPLISAV-B in the U.S., we expect to continue incurring 

operating losses for the foreseeable future. Our expenses have increased substantially as we established and maintain our 
HEPLISAV-B commercial infrastructure, including investments in internal infrastructure to support our field sales force and 
investments in manufacturing and supply chain commitments to maintain commercial supply of HEPLISAV-B. While new 
sales of CpG 1018 may generate revenue during the pandemic, there is no guarantee that such revenues will be sustainable in 
the long term. The timing for uptake of our products in the U.S. has further increased losses related to commercialization. 
Due to the numerous risks and uncertainties associated with developing and commercializing vaccine and pharmaceutical 
products, we are unable to predict the extent of any future losses or when, if ever, we will become profitable or that if we are 
able to reach profitability that it will be sustainable for any period of time.  

Until we are able to generate significant revenues or achieve profitability through product sales, we will require 
substantial additional capital to finance our operations.  

As of December 31, 2020, we had $165.0 million in cash, cash equivalents and marketable securities. We expect to 

incur operating losses for the foreseeable future as we continue to invest in commercialization of HEPLISAV-B and 
development and commercialization of our CpG 1018 adjuvant. If we cannot generate a sufficient amount of revenue from 
product sales, we will need to finance our operations through strategic alliance and licensing arrangements and/or future 
public or private debt or equity financings. Raising additional funds through the issuance of equity or debt securities could 
result in dilution to our existing stockholders, increased fixed payment obligations, or both. In addition, these securities may 
have rights senior to those of our common stock and could include covenants that would restrict our operations.  

26 

Our ability to raise additional capital in the equity and debt markets, should we choose to do so, is dependent on a 
number of factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number 
of development and business risks and uncertainties, our creditworthiness and the uncertainty that we would be able to raise 
such additional capital at a price or on terms that are favorable to us. In addition, our ability to raise additional funds may be 
adversely impacted by deteriorating global economic conditions and the recent disruptions to and volatility in the credit and 
financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. Adequate financing 
may not be available to us on acceptable terms, or at all. If adequate funds are not available when needed, we may need to 
significantly reduce our operations while we seek strategic alternatives, which could have an adverse impact on our ability to 
achieve our intended business objectives.  

Regulatory authorities may require more clinical trials for our product candidates than we currently expect or are 
conducting before granting regulatory approval, if regulatory approval is granted at all. Our clinical trials may be 
extended which may lead to substantial delays in the regulatory approval process for our product candidates and may 
impair our ability to generate revenues. 

Our registration and commercial timelines depend on further discussions with regulatory agencies and requirements 

and requests they may make for additional data or completion of additional clinical trials. Any such requirements or requests 
could: 

 

 

 

 

 

 

 

adversely affect our ability to timely and successfully commercialize or market these product candidates; 

result in significant additional costs; 

potentially diminish any competitive advantages for those products; 

potentially limit the markets for those products; 

adversely affect our ability to enter into collaborations or receive milestone payments or royalties from potential 
collaborators; 

cause us to abandon the development of the affected product candidate; or 

limit our ability to obtain additional financing on acceptable terms, if at all.  

We may continue to develop, seek regulatory approval for and market HEPLISAV-B or any other product candidates we 
may develop outside the U.S., requiring a significant commitment of resources. Failure to successfully manage our 
international operations could result in significant unanticipated costs and delays in regulatory approval or 
commercialization of our product candidates. 

We may seek to introduce HEPLISAV-B, or any other product candidates we may develop, to various additional 
markets outside the U.S. Developing, seeking regulatory approval for and marketing our product candidates outside the U.S. 
could impose substantial costs as well as burdens on our personnel resources in addition to potential diversion of 
management’s attention from domestic operations. International operations are subject to risk, including: 

 

 

 

 

 

 

 

 

 

the difficulty of managing geographically distant operations, including recruiting and retaining qualified 
employees, locating adequate facilities and establishing useful business support relationships in the local 
community; 

compliance with varying international regulatory requirements, laws and treaties; 

securing international distribution, marketing and sales capabilities upon favorable terms; 

adequate protection of our intellectual property rights; 

obtaining regulatory and pricing approvals at a level sufficient to justify commercialization; 

legal uncertainties and potential timing delays associated with tariffs, export licenses and other trade barriers; 

diverse tax consequences; 

the fluctuation of conversion rates between foreign currencies and the U.S. dollar; and 

regional and geopolitical risks. 

27 

In the event that we determine to pursue commercialization of HEPLISAV-B outside the United States and Europe, 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 addition, there is the risk that we may not receive 
approval in one or more jurisdictions. 

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 regulatory approval in the United States. 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 product candidates, which would impair our ability to generate revenues. 

Clinical trials for our commercial product and product candidates are expensive and time consuming, may take longer 
than we expect or may not be completed at all, and their outcomes are uncertain. 

Clinical trials, including post-marketing studies, to generate sufficient data to meet FDA requirements are expensive 
and time consuming, may take more time to complete than expected or may not be completed, and may not have favorable 
outcomes if they are completed. In addition, results from smaller, earlier stage clinical studies may not be representative of 
larger, controlled clinical trials that would be required in order to obtain regulatory approval of a product candidate. 

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”) or regulatory approval to conduct a clinical trial at a prospective site, unexpected 
adverse events and shortages of available drug supply. 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. 

As a biopharmaceutical company, we engage clinical research organizations (“CROs”) to conduct clinical studies, and 
failure by us or our CROs to conduct a clinical study in accordance with GCP standards and other applicable regulatory 
requirements could result in disqualification of the applicable clinical trial from consideration in support of approval of a 
potential product. 

We are responsible for conducting our clinical trials consistent with GCP standards and for oversight of our vendors to 

ensure that they comply with such standards. We depend on medical institutions and CROs to conduct our clinical trials in 
compliance with GCP. To the extent that we or they fail to comply with GCP standards, fail to enroll participants for our 
clinical trials, or are delayed for a significant time in the execution of our trials, including achieving full enrollment, we may 
be affected by increased costs, program delays or both, which may harm our business. 

Clinical trials must be conducted in accordance with FDA or other applicable foreign government guidelines and are 

subject to oversight by the FDA, other foreign governmental agencies and IRBs at the medical institutions where the clinical 
trials are conducted. In addition, clinical trials must be conducted with supplies of our product candidates produced under 
GMP and other requirements in foreign countries, and may require large numbers of participants. 

In addition, we obtain guidance from regulatory authorities on certain aspects of our clinical development activities and 

seek to comply with written guidelines provided by the authorities. These discussions and written guidelines are not binding 
obligations on the part of the regulatory authorities and the regulatory authorities may require additional patient data or 
studies to be conducted. Regulatory authorities may revise or retract previous guidance during the course of a clinical trial or 
after completion of the trial. The authorities may also disqualify a clinical trial from consideration in support of approval of a 
potential product if they deem the guidelines have not been met. The FDA or foreign regulatory agencies may determine our 
clinical trials or other data regarding safety, efficacy or consistency of manufacture or compliance with GMP regulations are 
insufficient for regulatory approval. 

The FDA or other foreign governmental agencies 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; 

28 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 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 
therapy, lack of efficacy or personal issues, or who are lost to further follow-up. 

In addition, we may experience significant setbacks in advanced clinical trials, even after promising results in earlier 

trials, such as unexpected adverse events that occur when our product candidates are combined with other therapies and drugs 
or given to larger patient populations, which often occur in later-stage clinical trials, or less favorable clinical outcomes. 
Moreover, clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory 
approvals.  

Third-party organizations such as patient advocacy groups and parents of trial participants may demand additional 

clinical trials or continued access to our drug even if our interpretation of clinical results received thus far leads us to 
determine that additional clinical trials or continued access are unwarranted. Any disagreement with patient advocacy groups 
or parents of trial participants may require management’s time and attention and may result in legal proceedings being 
instituted against us, which could be expensive, time-consuming and distracting, and may result in delay of the program. 
Negative or inconclusive results or adverse medical events, including participant fatalities that may be attributable to our 
product candidates, during a clinical trial may necessitate that it be redesigned, repeated or terminated. Further, some of our 
clinical trials may be overseen by a Data Safety Monitoring Board (“DSMB”), and the DSMB may determine to delay or 
suspend one or more of these trials due to safety or futility findings based on events occurring during a clinical trial. Any 
such delay, suspension, termination or request to repeat or redesign a trial could increase our costs and prevent or 
significantly delay our ability to commercialize our product candidates. 

HEPLISAV-B and most of our earlier stage programs rely on oligonucleotide TLR agonists. Serious adverse event data 
relating to TLR agonists may require us to reduce the scope of or discontinue our operations, or reevaluate the viability of 
strategic alternatives. 

Most of our programs, including HEPLISAV-B, incorporate TLR9 agonist CpG oligonucleotides. If any of our product 

candidates in clinical trials or similar products from competitors produce serious adverse event data, we may be required to 
delay, discontinue or modify our clinical trials or our clinical trial strategy, or significantly reevaluate strategic alternatives. If 
a safety risk based on mechanism of action or the molecular structure were identified, it may hinder our ability to develop our 
product candidates or enter into potential collaboration or commercial arrangements. Rare diseases and a numerical 
imbalance in cardiac adverse events have been observed in patients in our clinical trials. If adverse event data are found to 
apply to our TLR agonist and/or inhibitor technology as a whole, we may be required to significantly reduce or discontinue 
our operations. 

29 

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 our commercial business begins to expand in connection with commercial sales of HEPLISAV-B and CpG 1018, 
the contracts we enter into with our customers will generally carry delivery obligations that require us to deliver product in 
certain quantities and meeting certain quality thresholds, among other things, all within specified timeframes. If, for any 
reason, whether due to reliance on third-party manufacturers or otherwise, we are unable to deliver timely, compliant 
products to our customers in quantities that meet our contractual obligation, we could be subject to lost revenue, contractual 
penalties, suits for damages, harm to our reputation or other problems that could materially and adversely affect our business. 

HEPLISAV-B is subject to regulatory obligations and continued regulatory review, and if we receive regulatory approval 
for our other product candidates, we will be subject to ongoing FDA and foreign regulatory obligations and continued 
regulatory review for such products. 

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 GMP regulations and other international regulatory requirements. The 
regulations require that our product candidates be manufactured and records maintained in a prescribed manner with respect 
to manufacturing, testing and quality control/quality assurance activities. Manufacturers and suppliers of key components and 
materials must be named in a BLA submitted to the FDA for any product candidate for which we are seeking FDA approval. 
Additionally, third-party manufacturers and suppliers and any manufacturing facility must undergo a pre-approval inspection 
before we can obtain marketing authorization for any of our product candidates. Even after a manufacturer has been qualified 
by the FDA, the manufacturer must continue to expend time, money and effort in the area of production and quality control 
to ensure full compliance with GMP. 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, our ability to control 
third-party compliance with FDA requirements will be limited to contractual remedies and rights of inspection.  

If, as a result of the FDA’s inspections, it determines that the equipment, facilities, laboratories or processes do not 

comply with applicable FDA regulations and conditions of product approval, the FDA may not approve the product or may 
suspend the manufacturing operations. If the manufacturing operations of any of the suppliers for our product candidates are 
suspended, we may be unable to generate sufficient quantities of commercial or clinical supplies of product to meet market 
demand, which would harm our business. In addition, if delivery of material from our suppliers were interrupted for any 
reason, we might be unable to ship our approved product for commercial supply or to supply our products in development for 
clinical trials. Significant and costly delays can occur if the qualification of a new supplier is required. 

Failure to comply with regulatory requirements could prevent or delay marketing approval or require the expenditure of 

money or other resources to correct. Failure to comply with applicable requirements may also result in warning letters, fines, 
injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, refusal of the government 
to renew marketing applications and criminal prosecution, any of which could be harmful to our ability to generate revenues 
and to our stock price. 

Any regulatory approvals that we receive for our product candidates are likely to contain requirements for post-
marketing follow-up studies, which may be costly. Product approvals, once granted, may be modified based on data from 
subsequent studies or commercial use. As a result, limitations on labeling indications or marketing claims, or withdrawal 
from the market may be required if problems occur after approval and commercialization. 

A key part of our business strategy for products in development is to establish collaborative relationships to help fund 
development and commercialization of our product candidates and research programs. We may not succeed in 
establishing and maintaining collaborative relationships, which may significantly limit our ability to continue to develop 
and commercialize those products and programs, if at all. 

We may need to establish collaborative relationships to obtain domestic and/or international sales, marketing, research, 
development and distribution capabilities for our product candidates and our discovery research programs. Failure to obtain a 
collaborative relationship for those product candidates and programs or HEPLISAV-B in markets outside the U.S. requiring 
extensive sales efforts, may significantly impair the potential for those products and programs and we may be required to 
raise additional capital to continue them. The process of establishing and maintaining collaborative relationships is difficult 
and time-consuming, and even if we establish such relationships, they may involve significant uncertainty, including: 

 

our partners may seek to renegotiate or terminate their relationships with us due to unsatisfactory clinical results, 
manufacturing issues, a change in business strategy, a change of control or other reasons; 

30 

 

 

our shortage of capital resources may impact the willingness of companies to collaborate with us;  

our contracts for collaborative arrangements are terminable at will on written notice and may otherwise expire or 
terminate and we may not have alternative funding available; 

 

our partners may choose to pursue alternative technologies, including those of our competitors; 

  we may have disputes with a partner that could lead to litigation or arbitration; 

  we have limited control over the decisions of our partners and they may change the priority of our programs in a 
manner that would result in termination of the agreement or add significant delay in the partnered program; 

 

our ability to generate future payments and royalties from our partners depends upon the abilities of our partners to 
establish the safety and efficacy of our drug candidates, obtain regulatory approvals and successfully manufacture 
and achieve market acceptance of products developed from our drug candidates;  

  we or our partners may fail to properly initiate, maintain or defend our intellectual property rights, where 

applicable, or a party may use our proprietary information in such a way as to invite litigation that could jeopardize 
or potentially invalidate our proprietary information or expose us to potential liability; 

 

 

our partners may not devote sufficient capital or resources towards our product candidates; and 

our partners may not comply with applicable government regulatory requirements. 

Supporting diligence activities conducted by potential collaborators and negotiating the financial and other terms of a 

collaboration agreement are long and complex processes with uncertain results. Even if we are successful in entering into one 
or more collaboration agreements, collaborations may involve greater uncertainty for us, as we may have less control over 
certain aspects of our collaborative programs than we do over our proprietary development and commercialization programs, 
and the financial terms upon which collaborators may be willing to enter into such an arrangement cannot be certain.  

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 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. Despite our efforts, we may be unable to secure collaborative arrangements. If we are unable to establish and 
maintain collaborative relationships on acceptable terms or to successfully transition terminated collaborative agreements, we 
may have to delay or discontinue further development of one or more of our product candidates, undertake development and 
commercialization activities at our own expense or find alternative sources of capital.  

The term loan agreement we entered into in February 2018 imposes significant operating and financial restrictions on us 
that may prevent us from pursuing certain business opportunities and restrict our ability to operate our business.  

In February 2018, we entered into a term loan agreement under which we have borrowed $180.9 million, which 
includes paid-in-kind interest. The agreement contains covenants that restrict our ability to take various actions, including, 
among other things, incur additional indebtedness, pay dividends or distributions or make certain investments, create or incur 
certain liens, transfer, sell, lease or dispose of assets, enter into transactions with affiliates, consummate a merger or sell or 
otherwise dispose of assets. The agreement also requires us to comply with a daily minimum liquidity covenant and an 
annual revenue requirement based on the sales of HEPLISAV-B, which are (i) $30 million for the period July 1, 2019 
through June 30, 2020, (ii) $50 million for the period July 1, 2020 through June 30, 2021, (iii) $75 million for the period July 
1, 2021 through June 30, 2022 and (iv) $100 million for the period July 1, 2022 through June 30, 2023. In November 2020, 
we entered into an amendment to the term loan agreement that, among other things, (i) changes the annual revenue 
requirement to include all revenue, including CpG 1018 net sales, rather than net sales of HEPLISAV-B only, and (ii) deletes 
the $50 million revenue requirement for the period from July 1, 2020 through June 30, 2021 in its entirety. The agreement 
specifies a number of events of default, some of which are subject to applicable grace or cure periods, including, among other 
things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency 
defaults, and non-payment of material judgments.  

Our ability to comply with these covenants will likely be affected by many factors, including events beyond our control, 

and we may not satisfy those requirements. Our failure to comply with our obligations could result in an event of default and 
the acceleration of our repayment obligation at a time when we may not have the cash to comply with that obligation, which 
could result in a seizure of most of our assets. The restrictions contained in the agreement could also limit our ability to meet 
capital needs or otherwise restrict our activities and adversely affect our ability to finance our operations, enter into 
acquisitions or to engage in other business activities that would be in our interest. 

31 

We rely on CROs and Clinical Sites and Investigators for our clinical trials. If these third parties do not fulfill their 
contractual obligations or meet expected deadlines, our planned clinical trials may be delayed and we may fail to obtain 
the regulatory approvals necessary to commercialize our product candidates. 

We rely on CROs, clinical sites and investigators for our clinical trials. If these third parties do not perform their 
obligations or meet expected deadlines our planned clinical trials may be extended, delayed, modified or terminated. 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. Any 
extension, delay, modification or termination of our clinical trials or failure to ensure adequate documentation and the quality 
of the results in the clinical trials could delay or otherwise adversely affect our ability to commercialize our product 
candidates and could have a material adverse effect on our business and operations. 

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. 

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. Our interactions with physicians and others 
in a position to prescribe or purchase our products are subject to a legal regime designed to prevent healthcare fraud and 
abuse and off-label promotion. We also are subject to laws pertaining to transparency of transfers of value to healthcare 
providers; privacy and data protection; compliance with industry voluntary compliance guidelines; and prohibiting the 
payment of bribes. 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 penalty 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 (“CMS”), information related to payments and other transfers of value to 
physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, 
and ownership and investment interests held by such physicians and their immediate family members. Beginning 
in 2022, applicable manufacturers also will be required to report such information regarding its payments and other 
transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse 
anesthetists and certified nurse midwives during the previous year;  

 

the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created, among other 
things, new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program 
and making false statements relating to healthcare matters; 

  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 the company’s transactions; and 

32 

 

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. 

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. These 
entities also coordinate extensively with the FDA, using legal theories that connect violations of the Federal Food, Drug and 
Cosmetic Act (such as off-label promotion) to the eventual submission of false claims to government healthcare programs. 
Prosecution of such promotion cases under the False Claims Act provides the potential for private parties (qui tam relators, or 
“whistleblowers”) to initiate cases on behalf of the government and provides for significantly higher penalties upon 
conviction. 

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. 

Violations of any of the laws described above or any other applicable governmental regulations and other similar 
foreign laws may subject us, our employees or our agents to significant criminal, civil and administrative penalties, including 
fines, civil monetary penalties, exclusion from participation in government health care programs (including Medicare and 
Medicaid), disgorgement, imprisonment, additional reporting requirements and oversight if we become subject to a corporate 
integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the restriction or 
restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial 
results. Additionally, whether or not we have complied with the law, an investigation into alleged unlawful conduct may 
cause us to incur significant expense, cause reputational damage, divert management time and attention, and otherwise 
adversely affect our business. While we have developed and instituted a corporate compliance program, we cannot guarantee 
that we, our employees, our consultants, contractors, or other agents are or will be in compliance with all applicable U.S. or 
foreign laws. 

It remains unclear how various state, federal, and international privacy and cybersecurity law will affect our business. 

For example, we don’t know how the CCPA will be interpreted, but as currently written, it will likely impact our business 
activities and exemplifies the vulnerability of our business to not only cyber threats but also the evolving regulatory 
environment related to personal data. As we expand our operations, the CCPA may increase our compliance costs and 
potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent 
privacy legislation in the United States. Other states are beginning to pass similar laws.  

Internationally, the GDPR requires us to make more detailed disclosures to data subjects, requires disclosure of the 

legal basis on which we can process personal data, makes it harder for us to obtain valid consent for processing, will require 
the appointment of data protection officers when sensitive personal data, such as health data, is processed on a large scale, 
provides more robust rights for data subjects, introduces mandatory data breach notification through the EU, imposes 
additional obligations on us when contracting with service providers and requires us to adopt appropriate privacy governance 
including policies, procedures, training and data audit. If we do not comply with our obligations under the GDPR, we could 
be exposed to fines of up to the greater of €20 million or up to 4% of our total global annual revenue in the event of a 
significant breach. In addition, we may be the subject of litigation and/or adverse publicity, which could adversely affect our 
business, results of operations and financial condition. Also, mechanisms for legally transferring information under the 
GDPR remain unclear. At present, there are few if any viable alternatives to the SCCs, so future developments may 
necessitate further expenditures on local infrastructure, changes to internal business processes, or may otherwise affect or 
restrict sales and operations. 

In addition, our data security and information technology systems, as well as those of our partners and contractors, are 
potentially vulnerable to data security breaches, whether by employees or others, that may expose sensitive data or personal 
information to unauthorized persons.  

33 

Enacted or future legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, 
may have an adverse effect on our operations and business. 

We expect there will continue to be federal and state laws and/or regulations, proposed and implemented, that could 

impact our operations and business. For example, the ACA, among other things, imposes a significant annual fee on 
companies that manufacture or import branded prescription drug products. It also contains substantial provisions intended to 
broaden access to health insurance, reduce or constrain the growth of healthcare spending, and impose additional health 
policy reforms, any or all of which may affect our business. There remain legal and political challenges to certain aspects of 
ACA, as well as efforts by the Trump administration to repeal or replace certain aspects of the ACA. Since January 2017, 
President Trump signed several executive orders and other directives designed to delay, circumvent, or loosen certain 
requirements mandated by ACA. Concurrently, Congress considered legislation that would repeal or repeal and replace all or 
part of ACA. While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of 
certain taxes under the ACA have been signed into law. The Tax Cuts and Jobs Act of 2017, or Tax Act, includes a provision 
repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by ACA on certain individuals 
who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual 
mandate”. In addition, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-
mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January l, 
2021, also eliminated the health insurer tax. The Bipartisan Budget Act of 2018, or the BBA, among other things, amends the 
ACA, effective January 1, 2019, to increase from 50 percent to 70 percent the point-of-sale discount that is owed by 
pharmaceutical manufacturers who participate in Medicare Part D and close the coverage gap in most Medicare drug plans, 
commonly referred to as the “donut hole”. On December 14, 2018, a Texas U.S. District Court Judge ruled that the ACA is 
unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act. 
Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the 
individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the 
remaining provisions of the ACA are invalid as well. The U.S. Supreme Court is currently reviewing this case, but it is 
unknown when a decision will be reached. Although the U.S. Supreme Court has yet ruled on the constitutionality of the 
ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 
15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The 
executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that 
limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that 
include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage 
through Medicaid or the ACA. It is unclear how the Supreme Court ruling, other such litigation, and the healthcare reform 
measures will impact the ACA and our business. 

Other legislative changes have also been proposed and adopted since the ACA was enacted. For example, the Budget 
Control Act of 2011 resulted in aggregate reductions in Medicare payments to providers of up to two percent per fiscal year, 
starting in 2013 and, due to subsequent legislative amendments to the statute, including the BBA, will remain in effect 
through 2030 unless additional Congressional action is taken. However, COVID-19 relief support legislation suspended the 2% 
Medicare sequester from May 1, 2020 through March 31, 2021. In addition, the American Taxpayer Relief Act of 2012, 
among other things, reduced Medicare payments to several types of providers and increased the statute of limitations period 
for the government to recover overpayments to providers from three to five years. Such laws, and others that may affect our 
business that have been recently enacted or may in the future be enacted, may result in additional reductions in Medicare and 
other healthcare funding.  

Also, there has been heightened governmental scrutiny recently in the U.S. over pharmaceutical pricing practices in 

light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in several recent Congressional 
inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to 
product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program 
reimbursement methodologies for products. At the federal level, the Trump administration used several means to propose or 
implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives. For 
example, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to 
prescription drug pricing that attempt to implement several of the administration’s proposals. The FDA also released a final 
rule, effective November 30, 2020, implementing a portion of the importation executive order providing guidance for states 
to build and submit importation plans for drugs from Canada. Further, on November 20, 2020, HHS finalized a regulation 
removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either 
directly or through pharmacy benefit managers, unless the price reduction is required by law. The implementation of the rule 
has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation. The 
rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain 
fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been 
delayed pending review by the Biden administration until March 22, 2021. On November 20, 2020, CMS issued an interim 
final rule implementing President Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments 

34 

for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 
1, 2021. On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary 
injunction against implementation of the interim final rule. However, it is unclear whether the Biden administration will work 
to reverse these measures or pursue similar policy initiatives. At the state level, legislatures have increasingly passed 
legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or 
patient reimbursement constraints, discounts, and restrictions on certain product access. In some cases, such legislation and 
regulations have been designed to encourage importation from other countries and bulk purchasing. 

We cannot predict the initiatives that may be adopted in the future or the effect any such initiatives may have on our 

business. However, in the future, there will likely continue to be additional proposals relating to the reform of the U.S. 
healthcare system, some of which could further limit coverage and reimbursement of products, including our product 
candidates. Any reduction in reimbursement from Medicare or other government programs 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. Further, it is possible that 
additional governmental action is taken in response to the COVID-19 pandemic. 

We face product liability exposure, which, if not covered by insurance, could result in significant financial liability. 

While we have not experienced any product liability claims to date, the use of any of our product candidates in clinical 
trials and the sale of any approved products, including HEPLISAV-B, will subject us to potential product liability claims and 
may raise questions about a product’s safety and efficacy. As a result, we could experience a delay in our ability to 
commercialize one or more of our product candidates or reduced sales of any approved product candidates. In addition, a 
product liability claim may exceed the limits of our insurance policies and exhaust our internal resources. We have obtained 
limited clinical trial liability and umbrella insurance coverage for our clinical trials. This coverage may not be adequate or 
may not continue to be available in sufficient amounts, at an acceptable cost or at all. While we have obtained product 
liability insurance coverage for HEPLISAV-B, there is a risk that this coverage may not be adequate or may not continue to 
be available in sufficient amounts, at an acceptable cost or at all. We also may not be able to obtain commercially reasonable 
product liability insurance for any product approved for marketing in the future. A product liability claim, product recalls or 
other claims, as well as any claims for uninsured liabilities or in excess of insured liabilities, would divert our management’s 
attention from our business and could result in significant financial liability. 

Risks Related to our Intellectual Property 

We rely on licenses to intellectual property from third parties. Impairment of these licenses or our inability to maintain 
them would severely harm our business. 

Our current research and development efforts depend in part upon our license arrangements for intellectual property 

owned by third parties. Our dependence on these licenses subjects us to numerous risks, such as disputes regarding the use of 
the licensed intellectual property and the creation and ownership of new discoveries under such license agreements. In 
addition, these license arrangements require us to make timely payments to maintain our licenses and typically contain 
diligence or milestone-based termination provisions. Our failure to meet any obligations pursuant to these agreements could 
allow our licensors to terminate our agreements or undertake other remedies such as converting exclusive to non-exclusive 
licenses if we are unable to cure or obtain waivers for such failures or amend such agreements on terms acceptable to us. In 
addition, our license agreements may be terminated or may expire by their terms, and we may not be able to maintain the 
exclusivity of these licenses. If we cannot obtain and maintain licenses that are advantageous or necessary to the development 
or the commercialization of our product candidates, we may be required to expend significant time and resources to develop 
or license similar technology or to find other alternatives to maintaining the competitive position of our products. If such 
alternatives are not available to us in a timely manner or on acceptable terms, we may be unable to continue development or 
commercialize our product candidates. In the absence of a current license, we may be required to redesign our technology so 
it does not infringe a third-party’s patents, which may not be possible or could require substantial funds and time. 

If third parties successfully assert that we have infringed their patents and proprietary rights or challenge our patents and 
proprietary rights, we may become involved in intellectual property disputes and litigation that would be costly, time 
consuming and delay or prevent development or commercialization of our product candidates. 

We may be exposed to future litigation by third parties based on claims that our products, product candidates or 
proprietary technologies infringe their intellectual property rights, or we may be required to enter into litigation to enforce 
patents issued or licensed to us or to determine the ownership, scope or validity of our or another party’s proprietary rights, 
including a challenge as to the validity of our issued and pending claims. From time to time we are involved in various 
administrative proceedings related to our intellectual property which causes us to incur certain legal expenses. If we become 
involved in any litigation and/or other significant proceedings related to our intellectual property or the intellectual property 
of others, we will incur substantial additional expenses and it will divert the efforts of our technical and management 
personnel. 

35 

If we or our collaborators are unsuccessful in defending or prosecuting our issued and pending claims or in defending 
potential claims against our products, for example, as may arise in connection with the commercialization of HEPLISAV-B 
or any similar or other  product candidate, we or our collaborator could be required to pay substantial damages or be unable 
to commercialize our product candidates or use our proprietary technologies without a license from such third-party. A 
license may require the payment of substantial fees or royalties, require a grant of a cross-license to our technology or may 
not be available on acceptable terms, if at all. Any of these outcomes could require us to change our business strategy and 
could materially impact our business and operations. 

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 will decrease, and we may be unable to realize any 
commercial benefit from the development of a vaccine containing CpG 1018. 

Our success depends on our ability to: 

 

 

 

obtain and protect commercially valuable patents or the rights to patents both domestically and abroad; 

operate without infringing upon the proprietary rights of others; and 

prevent others from successfully challenging or infringing our proprietary rights. 

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. 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. In the U.S., legal standards 
relating to the validity and scope of patent claims in the biopharmaceutical field can be highly uncertain, are still evolving 
and involve complex legal and factual questions for which important legal principles remain unresolved. 

For example, CpG 1018 has no composition of matter patent protection in the United States or elsewhere. We must 

therefore rely primarily on the protection afforded by method of use patents relating to the use of CpG 1018 in vaccines, and 
trade secret protection and confidentiality and other agreements to protect our interests in proprietary know-how related to 
CpG 1018. We have filed patent applications claiming compositions and methods of use of CpG 1018 for COVID-19 and 
other vaccines, but we cannot provide any assurances that we will receive an issued patent for any of these patent applications 
or that, if issued, any of these patents will provide adequate protection for any intended use of CpG 1018 in vaccines. If we 
are unable to adequately obtain patent protection or enforce our other proprietary rights relating to CpG 1018, we may be 
unable to realize any commercial benefit from the development of a vaccine containing CpG 1018, and we may not have the 
ability to prevent others from developing or commercializing a vaccine containing CpG 1018. 

The biopharmaceutical patent environment outside the U.S. is also uncertain. We may be particularly affected by this 

uncertainty since several of our product candidates or our collaborators’ vaccine candidates may initially address market 
opportunities outside the U.S., where we may only be able to obtain limited patent protection, if any. For example, while 
many countries such as the United States permit method of use patents relating to the use of drug products, in some countries 
the law relating to patentability of such use claims is evolving and may be unfavorably interpreted to prevent us from 
successfully prosecuting some or all of our pending patent applications relating to the use of CpG 1018. There are some 
countries that currently do not allow such method of use patents, or that significantly limit the types of uses that are 
patentable. 

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 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; 

36 

 

 

 

 

 

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; and 

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 proceedings, such as inter 
partes review (“IPR”), pre- and post-grant oppositions, and post grant review (“PGR”). 

We also rely on trade secret protection and confidentiality agreements to protect our interests in proprietary know-how 
that is not patentable and for processes for which patents are difficult to enforce. We cannot be certain that we will be able to 
protect our trade secrets adequately. Any disclosure of confidential data in the public domain or to third parties could allow 
our competitors to learn our trade secrets. If we are unable to adequately obtain or enforce proprietary rights, we may be 
unable to commercialize our products, enter into collaborations, generate revenues or maintain any advantage we may have 
with respect to existing or potential competitors. 

Risks Related to an Investment in our Common Stock 

Our stock price is subject to volatility, and your investment may suffer a decline in value. 

The market prices for securities of biopharmaceutical companies have in the past been, and are likely to continue in the 

future, to be, very volatile. 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 on our HEPLISAV-B 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 agencies; 

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; 

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; and 

the volume of trading in our common stock. 

37 

The stock markets in general, and the markets for biotechnology and pharmaceutical stocks in particular, have 
historically experienced significant volatility that has often been unrelated or disproportionate to the operating performance 
of particular companies, including recently in connection with the ongoing COVID-19 pandemic, which has resulted in 
decreased market prices, notwithstanding the lack of a fundamental change in the underlying business models or prospects of 
those companies. These broad market fluctuations have adversely affected and may in the future adversely affect the market 
price of our common stock. In this regard, worsening economic conditions and other adverse effects or developments relating 
to the ongoing COVID-19 pandemic may negatively affect the market price of our common stock, regardless of our actual 
operating performance. 

One or more of these factors could cause a substantial decline in the price of our common stock. In addition, securities 
class action and shareholder derivative litigation has often been brought against a company following a decline in the market 
price of its securities. We have in the past been, and we may in the future be, the target of such litigation. Securities and 
shareholder derivative litigation could result in substantial costs, and divert management’s attention and resources, which 
could harm our business, operating results and financial condition. 

Future sales of our common stock or the perception that such sales may occur in the public market could cause our stock 
price to fall. 

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales 
might occur, could depress the market price of our common stock and could impair our ability to raise capital through the 
sale of additional equity securities.  

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, under which we can 
offer and sell our common stock from time to time up to aggregate sales proceeds of $150 million.  

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. 

General Risk Factors 

The loss of key personnel could delay or prevent achieving our objectives. In addition, our continued growth to support 
commercialization may result in difficulties in managing our growth and expanding our operations successfully. 

We depend on our senior executive officers, as well as other key scientific personnel. Our commercial and business 

efforts could be adversely affected by the loss of one or more key members of our commercial or management staff, 
including our senior executive officers. We currently have no key person insurance on any of our employees. 

As our operations expand, we expect that we will need to manage additional relationships with various vendors, 
partners, suppliers and other third parties. Future growth will impose significant added responsibilities on members of 
management. Our future financial performance and our ability to successfully commercialize HEPLISAV-B and to compete 
effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to 
effectively manage our commercialization efforts, research efforts and clinical trials and hire, train and integrate additional 
regulatory, manufacturing, administrative, and sales and marketing personnel. We may not be able to accomplish these tasks, 
and our failure to accomplish any of them could prevent us from successfully growing our company and achieving 
profitability. 

Our business operations are vulnerable to interruptions by natural disasters, health epidemics and other catastrophic 
events beyond our control, the occurrence of which could materially harm our manufacturing, distribution, sales, 
business operations and financial results. 

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, and geo-political unrest and uncertainties. We have not undertaken a systematic analysis of the 
potential consequences to our business that might result from any such natural disaster or other catastrophic event and have 
limited recovery plans in place. If any of these events occur, our manufacturing and supply chain, distribution, sales and 

38 

marketing efforts and other business operations could be subject to business shutdowns or disruptions and financial results 
could be adversely affected. We cannot presently predict the scope and severity of any potential business shutdowns or 
disruptions resulting from these events, but if we or any of the third parties with whom we engage, including the suppliers, 
contract manufacturers, distributors and other third parties with whom we conduct business, were to experience shutdowns or 
other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be 
materially and adversely affected in a number of ways, some of which are not predicable.  

Our business could be adversely affected by health epidemics in regions where we have manufacturing facilities, sales 

activities or other business operations. For example, outbreaks of epidemic or pandemic diseases, such as the ongoing 
COVID-19 pandemic, or the fear of such events, could cause restrictions on supply chains, access to workplaces and affect 
employee health and availability. 

Although we maintain inventories of HEPLISAV-B and its components, our ability and those of our contractors and 

distributors to produce and distribute HEPLISAV-B could be adversely affected. A pandemic or similar health challenge 
could severely impact the U.S. healthcare system, which may have an adverse effect on usage and sales of HEPLISAV-B. In 
addition, any such event could result in widespread global health crisis that could adversely affect global economies and 
financial markets resulting in an economic downturn that could affect the demand for HEPLISAV-B and future revenue and 
operating results and our ability to raise additional capital when needed on acceptable terms, if at all. 

Additionally, our corporate headquarters in Emeryville, California, is located in a seismically active region that also is 
subject to possible electrical shutdowns and wildfires. Because we do not carry earthquake insurance for earthquake-related 
losses and significant recovery time could be required to resume operations, our financial condition and operating results 
could be materially adversely affected in the event of a major earthquake or catastrophic event. We carry only limited 
business interruption insurance that would compensate us for actual losses from interruption of our business that may occur, 
and any losses or damages incurred by us in excess of insured amounts could adversely affect our business and operations. 

Significant disruptions of information technology systems or breaches of data security could adversely affect our business. 

Our business is increasingly dependent on critical, complex and interdependent information technology systems, 
including internet-based systems, to support business processes as well as internal and external communications. In addition, 
the COVID-19 pandemic has intensified our dependence on information technology systems as many of our critical business 
activities are currently being conducted remotely. The size and complexity of our computer systems make them potentially 
vulnerable to breakdown, malicious intrusion and computer viruses that may result in the impairment of key business 
processes.   

In addition, our systems are potentially vulnerable to data security breaches—whether by employees or others—that 

may expose sensitive data to unauthorized persons. Such data security breaches could lead to the loss of trade secrets or other 
intellectual property, or could lead to the public exposure of personally identifiable information (including sensitive personal 
information) of our employees, collaborators, clinical trial patients, and others. A data security breach or privacy violation 
that leads to disclosure or modification of or prevents access to patient information, including personally identifiable 
information or protected health information, could harm our reputation, compel us to comply with federal, state and/or 
international data breach notification laws, subject us to mandatory corrective action, require us to verify the correctness of 
database contents and otherwise subject us to liability under laws and regulations that protect personal data, including but not 
limited to HIPAA, similar state data protection regulations, and the GDPR, resulting in significant penalties; increased costs; 
loss of revenue; expenses of computer or forensic investigations; material fines and penalties; compensatory, special, punitive 
or statutory damages; litigation; consent orders regarding our privacy and security practices; requirements that we provide 
notices, credit monitoring services and/or credit restoration services or other relevant services to impacted individuals; 
adverse actions against our licenses to do business; or injunctive relief. News reports have also highlighted COVID research-
specific hacking and phishing attempts. Because we and our collaborators are working on vaccines, including potential 
COVID vaccines, we may be at higher-than-average risk for such attempts.  

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-

intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data 
protection rules. If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could 
adversely affect our business, financial condition and results of operations. Furthermore, the laws are not consistent, and 
compliance in the event of a widespread data breach is costly. 

39 

 
U.S. and international authorities have been warning businesses of increased cybersecurity threats from actors seeking 

to exploit the COVID-19 pandemic. We have recently experienced a cybersecurity incident known as a phishing e-mail scam, 
and although we do not consider its impact on us to be material, if we are unable to prevent this or other such data security 
breaches or privacy violations or implement satisfactory remedial measures, our operations could be disrupted, and we may 
suffer loss of reputation, financial loss and other regulatory penalties because of lost or misappropriated information, 
including sensitive patient data. Moreover, failure to maintain effective internal accounting controls related to data security 
breaches and cybersecurity in general could impact our ability to produce timely and accurate financial statements and could 
subject us to regulatory scrutiny. In addition, these breaches and other inappropriate access can be difficult to detect, and any 
delay in identifying them may lead to increased harm of the type described above. Moreover, the prevalent use of mobile 
devices that access confidential information increases the risk of data security breaches, which could lead to the loss of 
confidential information, trade secrets or other intellectual property. While we have implemented security measures that are 
intended to protect our data security and information technology systems, such measures may not prevent such events. 

Such disruptions and breaches of security could have a material adverse effect on our business, financial condition and 

results of operations. 

ITEM 1B. 

UNRESOLVED STAFF COMMENTS  

None.  

ITEM 2. 

PROPERTIES 

As of December 31, 2020, we lease our facilities in Emeryville, California and Düsseldorf, Germany. 

In July 2019, we entered into an agreement to sublease 23,976 square feet of office space located at 2100 Powell Street, 

Emeryville, California for our new global headquarters. This sublease agreement will continue until June 30, 2022.   

In September 2018, we entered into an agreement to lease 75,662 square feet of laboratory and office space located at 
5959 Horton Street, Emeryville, California (“Horton Street Lease”). Following our strategic organizational restructuring in 
May 2019, in July 2019, we entered into an agreement to sublease the entire 75,662 square feet to a third party (“Horton 
Street Sublease”). Both the Horton Street Lease and Horton Street Sublease will continue until March 31, 2031.   

We also lease approximately 5,600 square meters of manufacturing and office space in Düsseldorf, Germany under 

lease agreements expiring in March 2023.  

We believe that our facilities are adequate to meet our requirements for the near term. 

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 the Company. 

ITEM 4. 

MINE SAFETY DISCLOSURE  

Not applicable. 

40 

 
PART II  

ITEM  5. 

MARKET FOR THE 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 Capital Market under the ticker symbol “DVAX”.  

As of February 22, 2021, there were approximately 50 holders of record of our common stock, one of which was Cede 
& Co., a nominee for Depository Trust Company (“DTC”). All of the shares of our common stock held by brokerage firms, 
banks and other financial institutions as nominees for beneficial owners are deposited into participant accounts at DTC and 
are therefore considered to be held of record by Cede & Co. as one stockholder.  

Dividends  

We have never paid any cash dividends on our common stock. We currently expect to retain future earnings for use in 

the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. 
Additionally, in February 2018, we entered into a $175.0 million term loan agreement with CRG Servicing LLC, which 
restricts our ability to pay any dividend. 

Recent Sales of Unregistered Securities  

None. 

Issuer Purchases of Equity Securities  

None. 

ITEM 6. 

SELECTED FINANCIAL DATA  

The Company has elected to comply with Item 301 of Regulation S-K, as amended February 10, 2021 and is omitting 

this disclosure in reliance thereon.  

41 

 
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. Our actual results could differ materially from 
those indicated by forward-looking statements as a result of various factors, including but not limited to, the period for which 
we estimate our cash resources are sufficient, the availability of additional funds, as well as those set forth under “Risk 
Factors” and those that may be identified from time to time in our reports and registration statements filed with the 
Securities and Exchange Commission.  

The following discussion and analysis is intended to provide an investor with a narrative of our financial results and 

an evaluation of our financial condition and results of operations. The discussion should be read in conjunction with the 
Consolidated Financial Statements and the related notes thereto set forth in “Item 8—Financial Statements and 
Supplementary Data.”  

Overview 

We are a commercial stage biopharmaceutical company focused on developing and commercializing novel vaccines. 
Our first marketed product, HEPLISAV-B® (Hepatitis B Vaccine (Recombinant), Adjuvanted) is approved by the United 
States Food and Drug Administration (“FDA”) for prevention of infection caused by all known subtypes of hepatitis B virus 
in adults age 18 years and older. We also manufacture and sell CpG 1018, the adjuvant used in HEPLISAV-B. We are 
working to develop CpG 1018 as a premier vaccine adjuvant through research collaborations and partnerships. Current 
collaborations are focused on adjuvanted vaccines for COVID-19, pertussis and universal influenza. 

In Phase 3 trials, HEPLISAV-B demonstrated faster and higher rates of protection with two doses in one month 
compared to another currently approved hepatitis B vaccine which requires three doses over six months, with a similar safety 
profile. HEPLISAV-B is the only two-dose hepatitis B vaccine for adults approved in the U.S. 

We have worldwide commercial rights to HEPLISAV-B and we market it in the United States. There are three other 

vaccines approved for the prevention of hepatitis B in the U.S.: Engerix-B and Twinrix® from GlaxoSmithKline plc and 
Recombivax-HB® from Merck & Co. In addition, we received Marketing Authorization approval of HEPLISAV-B in 
February 2021 from the European Commission following a positive recommendation in December 2020 from the European 
Medicines Agency (“EMA”) Committee for Medicinal Products (“CHMP”) for Human Use for prevention of infection 
caused by all known subtypes of hepatitis B virus in adults age 18 years and older. We expect to launch HEPLISAV-B in the 
European Union in late 2021, initially focusing on one or a few key countries where it would be commercially feasible to 
market HEPLISAV-B on our own or through third-parties. 

All of our HEPLISAV-B sales are to certain wholesalers and specialty distributors in the U.S. whose principal 

customers include independent hospitals and clinics, integrated delivery networks, public health clinics and prisons, the 
Departments of Defense and Veterans Affairs and retail pharmacies. For the year ended December 31, 2020, HEPLISAV-B 
product revenue, net was $36.0 million. 

In the third quarter of 2020, we commenced selling our novel adjuvant, CpG 1018, to certain of our collaboration 

partners for their use in development and/or commercialization of COVID-19 vaccines. For the year ended December 31, 
2020, CpG 1018 product revenue, net was $3.3 million. In the third quarter of 2020, we also announced a commercial supply 
agreement with Valneva Scotland Limited (“Valneva”) to cover the supply of CpG 1018 for up to 190 million doses of their 
SARS-COV-2 vaccine candidate, subject to the terms of the agreement and contingencies contained therein.  

In May 2020, we completed an underwritten public offering of 16,100,000 shares of our common stock at a public 

offering price of $5.00 per share. The net proceeds from this offering were approximately $75.4 million, after deducting the 
underwriting discount and other offering expenses. 

In August 2020, we entered into a new At Market Sales Agreement with Cowen (“2020 ATM Agreement”), which 
replaced the 2017 At Market Sales Agreement (“2017 ATM Agreement”). Under the 2020 ATM Agreement, we can offer 
and sell up to $150 million of our common stock from time to time. For the year ended December 31, 2020, we received net 
cash proceeds of $33.1 million from sales of 8,114,643 shares of our common stock under the 2017 ATM Agreement and 
2020 ATM Agreement.  

42 

In July 2020, we sold assets related to our immuno-oncology compound, SD-101, to Surefire Medical Inc. d/b/a 
TriSalus Life Sciences (“TriSalus”). Pursuant to the Asset Purchase Agreement, we received $5 million upon closing of the 
transaction and $4 million in December 2020 as reimbursement for certain clinical trial expenses. In addition, we could 
receive up to an additional $250 million upon the achievement of certain development, regulatory, and commercial 
milestones and low double-digit royalties based on potential future net sales of product containing SD-101 compound. In the 
third quarter of 2020, we recognized a gain on sale of SD-101 assets of $6.9 million, net of transaction costs. 

COVID-19 Update 

We are continuing to closely monitor the impact of the evolving effects of the COVID-19 pandemic on our business 

and are taking proactive efforts designed to protect the health and safety of our workforce, patients and healthcare 
professionals, and to continue our business operations and advance our goal of bringing important new vaccines to patients as 
rapidly as possible.  

Our customers’ procurement activities coupled with restrictions at healthcare facilities during the pandemic, has 
negatively affected our sales of HEPLISAV-B. This is consistent with reduced utilization of adult vaccines generally, 
because focus in healthcare has been acutely placed on the treatment and prevention of COVID-19. The COVID-19 
pandemic continued to disrupt the adult vaccine market in the fourth quarter with market utilization shifting back to a sharp 
decline from the third quarter recovery trend. The total adult hepatitis B market saw a reduction in utilization of 
approximately 35% in the fourth quarter compared to the same period last year. In the third quarter, utilization was down 
approximately 24% from the same period last year. Additionally, Centers for Disease Control and Prevention (“CDC”) 
guidance requiring 14-day spacing of vaccines before and after COVID-19 vaccine administration began to stall other adult 
vaccine utilization in the month of December and has continued to impact utilization into the first quarter which is a trend we 
believe will continue throughout the first half of 2021. Although utilization of vaccines generally has decreased during the 
pandemic, our sales efforts have continued to increase our market share.  

We have also seen increased interest in our advanced adjuvant, CpG 1018, from our collaborators who are focused on 
developing COVID-19 vaccines of their own, as well as other potential vaccine candidates targeted at other indications. As a 
result, we have been working with our supplier to secure additional manufacturing capacity to help support this increased 
interest in CpG 1018. 

Currently, our HEPLISAV-B post-marketing observational studies are fully enrolled and continuing uninterrupted. Due 

to the design and conduct of the studies, we do not anticipate an impact to the integrity of the studies from “shelter in place” 
mandates. The HEPLISAV-B dialysis study is able to continue, because the dialysis treatment is classified under “essential 
travel” exemptions. 

The extent of the impact of the COVID-19 pandemic on our ability to generate sales and revenues, our regulatory 
efforts, our corporate development objectives and the value of and market for our common stock, will depend on future 
developments that are highly uncertain and cannot be predicted with confidence at this time. Because of the above and other 
factors, our results of operations may vary substantially from year to year and from quarter to quarter and, as a result, we 
believe that period-to-period comparisons of our operating results may not be meaningful and should not be relied upon as 
being indicative of our future performance. For additional information on the various current and future potential risks posed 
by the COVID-19 pandemic, please read Item 1A. Risk Factors, included herein. 

Critical Accounting Policies and the Use of Estimates  

The accompanying discussion and analysis of our financial condition and results of operations are based upon our 

consolidated financial statements and the related disclosures, which have been prepared in accordance with U.S. generally 
accepted accounting principles. The preparation of these financial statements requires us to make estimates, assumptions and 
judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the 
balance sheet dates and the reported amounts of revenues and expenses for the periods presented. On an ongoing basis, we 
evaluate our estimates, assumptions and judgments described below that have the greatest potential impact on our 
consolidated financial statements, including those related to revenue recognition, research and development activities, stock-
based compensation, inventories and leases. We base our estimates on historical experience and on various other assumptions 
that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the 
carrying values of assets and liabilities that are not readily apparent from other sources. Accounting assumptions and 
estimates are inherently uncertain and actual results may differ materially from these estimates under different assumptions or 
conditions. 

43 

While our significant accounting policies are more fully described in Note 2 to the Consolidated Financial Statements 

in this Annual Report on Form 10-K, we believe the following accounting policies reflect the more critical and significant 
judgments and estimates used in the preparation of our consolidated financial statements. 

Revenue Recognition  

We recognize revenue when the customer obtains control of promised goods or services, in an amount that reflects the 

consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for 
arrangements that we determine are within the scope of Accounting Standards Codification (“ASC”) 606, we perform the 
following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) 
determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) 
recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it 
is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the 
customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or 
services promised within each contract and determine those that are performance obligations, and assess whether each 
promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the 
respective performance obligation when (or as) the performance obligation is satisfied.  

Product Revenue, Net – HEPLISAV-B 

We sell HEPLISAV-B to a limited number of wholesalers and specialty distributors in the U.S. (collectively, our 
“Customers”). Revenues from product sales are recognized when we have satisfied our performance obligation, which is the 
transfer of control of our product upon delivery to the Customer. The timing between the recognition of revenue for product 
sales and the receipt of payment is not significant. Because our standard credit terms are short-term and we expect to receive 
payment in less than one year, there is no significant financing component on the related receivables. Taxes collected from 
Customers relating to product sales and remitted to governmental authorities are excluded from revenues. 

Overall, product revenue, net, reflects our best estimates of the amount of consideration to which we are entitled based 
on the terms of the contract. The amount of variable consideration is included in the net sales price only to the extent that it is 
probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If 
our estimates differ significantly from actuals, we will record adjustments that would affect product revenue, net in the period 
of adjustment. 

Reserves for Variable Consideration 

Revenues from product sales are recorded at the net sales price, which includes estimates of variable consideration 

such as product returns, chargebacks, discounts, rebates and other fees that are offered within contracts between us and our 
Customers, healthcare providers, pharmacies and others relating to our product sales. We estimate variable consideration 
using either the most likely amount method or the expected value method, depending on the type of variable consideration 
and what method better predicts the amount of consideration we expect to receive. We take into consideration relevant factors 
such as industry data, current contractual terms, available information about Customers’ inventory, resale and chargeback 
data and forecasted customer buying and payment patterns, in estimating each variable consideration. The variable 
consideration is recorded at the time product sales is recognized, resulting in a reduction in product revenue and a reduction 
in accounts receivable (if the Customer offsets the amount against its accounts receivable) or as an accrued liability (if we 
pay the amount through our accounts payable process). Variable consideration requires significant estimates, judgment and 
information obtained from external sources. The amount of variable consideration is included in the net sales price only to the 
extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a 
future period. If our estimates differ significantly from actuals, we will record adjustments that would affect product revenue, 
net in the period of adjustment. If we were to change any of these judgments or estimates, it could cause a material increase 
or decrease in the amount of revenue that we report in a particular period. We evaluate our estimates of variable 
considerations including, but not limited to, product returns, chargebacks and rebates, periodically or when there is an event 
or change in circumstances that may indicate that our estimates may change. During the fourth quarter of 2020, based on an 
analysis of historical product returns and customer ordering patterns, we decreased our returns reserve resulting in an increase 
in HEPLISAV-B product revenue, net of approximately $0.8 million. There were no material adjustments to these estimates 
for the years ended December 31, 2019 and 2018. 

Product Returns: Consistent with industry practice, we offer our Customers a limited right of return based on the 
product’s expiration date for product that has been purchased from us. We estimate the amount of our product sales that may 
be returned by our Customers and record this estimate as a reduction of revenue in the period the related product revenue is 
recognized. We consider several factors in the estimation of potential product returns including expiration dates of the 
product shipped, the limited product return rights, available information about Customers’ inventory, shelf life of the product 
and other relevant factors.  

44 

Chargebacks: Our Customers subsequently resell our product to healthcare providers, pharmacies and others. In 
addition to distribution agreements with Customers, we enter into arrangements with qualified healthcare providers that 
provide for chargebacks and discounts with respect to the purchase of our product. Chargebacks represent the estimated 
obligations resulting from contractual commitments to sell product to qualified healthcare providers at prices lower than the 
list prices charged to Customers who directly purchase the product from us. Customers charge us for the difference between 
what they pay for the product and the ultimate selling price to the qualified healthcare providers. These reserves are 
established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts 
receivable. Chargeback amounts are determined at the time of resale to the qualified healthcare providers by Customers, and 
we issue credits for such amounts generally within a few weeks of the Customer’s notification to us of the resale. Reserves 
for chargebacks consists of credits that we expect to issue for units that remain in the distribution channel inventories at each 
reporting period end that we expect will be sold to the qualified healthcare providers, and chargebacks for units that our 
Customers have sold to the qualified healthcare providers, but for which credits have not been issued. 

Trade Discounts and Allowances: We provide our Customers with discounts which include early payment incentives 
that are explicitly stated in our contracts and are recorded as a reduction of revenue in the period the related product revenue 
is recognized.  

Distribution Fees: Distribution fees include fees paid to certain Customers for sales order management, data and 

distribution services. Distribution fees are recorded as a reduction of revenue in the period the related product revenue is 
recognized. 

Rebates: Under certain contracts, customers may obtain rebates for purchasing minimum volumes of our product. We 

estimate these rebates based upon the expected purchases and the contractual rebate rate and record this estimate as a 
reduction in revenue in the period the related revenue is recognized. 

Product Revenue, Net – CpG 1018 

We also sell our novel adjuvant, CpG 1018, to our collaboration partners for use in their development and/or 

commercialization of COVID-19 vaccine. We have determined that our collaboration partners meet the definition of 
customers under ASC 606. Therefore, we accounted for our CpG 1018 sales under ASC 606. Revenues from product sales 
are recognized when we have satisfied our performance obligation, which is the transfer of control of our product to the 
customer. Because the timing between the recognition of revenue for product sales and the receipt of payment is less than one 
year, there is no significant financing component on the related receivables.  

Overall, product revenue, net, reflects our best estimates of the amount of consideration to which we are entitled based 

on the terms of the contract. The amount of consideration is included in the net sales price only to the extent that it is 
probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If 
our estimates differ significantly from actuals, we will record adjustments that would affect product revenue, net in the period 
of adjustment.   

Collaboration and Manufacturing Service Revenue 

We have entered into collaborative arrangements and arrangements to provide manufacturing services to other 
companies. Such arrangements may include promises to customers which, if capable of being distinct, are accounted for as 
separate performance obligations. For agreements with multiple performance obligations, we allocate estimated revenue to 
each performance obligation at contract inception based on the estimated transaction price of each performance obligation. 
Revenue allocated to each performance obligation is then recognized when we satisfy the performance obligation by 
transferring control of the promised good or service to the customer. Collaboration and manufacturing service revenue are 
recorded in other revenue in the consolidated statements of operations. 

Research and Development Expenses and Accruals 

Research and development expenses include personnel and facility-related expenses, outside contracted services 
including clinical trial costs, manufacturing and process development costs, research costs and other consulting services and 
non-cash stock-based compensation. Research and development costs are expensed as incurred. Amounts due under contracts 
with third parties may be either fixed fee or fee for service, and may include upfront payments, monthly payments and 
payments upon the completion of milestones or receipt of deliverables. Non-refundable advance payments under agreements 
are capitalized and expensed as the related goods are delivered or services are performed. 

45 

We contract with third parties to perform various clinical trial activities in the on-going development of potential 
products. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in 
uneven payment flows to our vendors. Payments under the contracts depend on factors such as the achievement of certain 
events, successful enrollment of patients, and completion of portions of the clinical trial or similar conditions. Our accrual for 
clinical trials is based on estimates of the services received and efforts expended pursuant to contracts with clinical trial 
centers and clinical research organizations. We may terminate these contracts upon written notice and we are generally only 
liable for actual effort expended by the organizations to the date of termination, although in certain instances we may be 
further responsible for termination fees and penalties. We estimate research and development expenses and the related 
accrual as of each balance sheet date based on the facts and circumstances known to us at that time. There have been no 
material adjustments to the prior period accrued estimates for clinical trial activities during the years presented. 

Stock-Based Compensation  

Stock-based compensation expense for restricted stock units and stock options is estimated at the grant date based on 

the award’s estimated fair value and is recognized on a straight-line basis over the award’s requisite service period, assuming 
estimated forfeiture rates. Fair value of restricted stock units is determined at the date of grant using the Company’s closing 
stock price. Our determination of the fair value of stock options on the date of grant using an option-pricing model is affected 
by our stock price, as well as assumptions regarding a number of subjective variables. We selected the Black-Scholes option 
pricing model as the most appropriate method for determining the estimated fair value-based measurement of our stock 
options. The Black-Scholes model requires the use of subjective assumptions which determine the fair value-based 
measurement of stock options. These assumptions include, but are not limited to, our expected stock price volatility over the 
term of the awards, and projected employee stock option exercise behaviors. In the future, as additional empirical evidence 
regarding these input estimates becomes available, we may change or refine our approach of deriving these input estimates. 
These changes could impact our fair value of stock options granted in the future. Changes in the fair value of stock awards 
could materially impact our operating results.  

Our current estimate of volatility is based on the historical volatility of our stock price. To the extent volatility in our 

stock price increases in the future, our estimates of the fair value of options granted in the future could increase, thereby 
increasing stock-based compensation cost recognized in future periods. We derive the expected term assumption primarily 
based on our historical settlement experience, while giving consideration to options that have not yet completed a full life 
cycle. Stock-based compensation cost is recognized only for awards ultimately expected to vest. Our estimate of the 
forfeiture rate is based primarily on our historical experience. To the extent we revise this estimate in the future, our share-
based compensation cost could be materially impacted in the period of revision. There have been no material adjustments to 
these estimates during the years presented. 

Inventories 

Inventory is stated at the lower of cost or estimated net realizable value, on a first-in, first-out (“FIFO”), basis. We 
primarily use actual costs to determine our cost basis for inventories. Our assessment of market value requires the use of 
estimates regarding the net realizable value of our inventory balances, including an assessment of excess or obsolete 
inventory. We determine excess or obsolete inventory based on multiple factors, including an estimate of the future demand 
for our products, product expiration dates and current sales levels. 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. For the year ended December 31, 2020 and 
2019, there were no inventory reserves recognized. During 2018, we recorded $1.0 million in inventory reserves, which is 
included in cost of sales – product. 

We consider regulatory approval of product candidates to be uncertain and product manufactured prior to regulatory 
approval may not be sold unless regulatory approval is obtained. As such, the manufacturing costs for product candidates 
incurred prior to regulatory approval are not capitalized as inventory but are expensed as research and development costs. We 
begin capitalization of these inventory related costs once regulatory approval is obtained.  

HEPLISAV-B was approved by the FDA on November 9, 2017, at which time we began to capitalize inventory costs 

associated with the vial presentation of HEPLISAV-B. In March 2018, we received regulatory approval of the pre-filled 
syringe (“PFS”) presentation of HEPLISAV-B. Prior to FDA approval of HEPLISAV-B, all costs related to the 
manufacturing of HEPLISAV-B that could potentially be available to support the commercial launch, were charged to 
research and development expense in the period incurred as there was no alternative future use. Prior to regulatory approval 
of PFS, costs associated with resuming operating activities at the Düsseldorf manufacturing facility were also included in 
research and development expense. Subsequent to regulatory approval of PFS, costs associated with resuming manufacturing 
activities at the Düsseldorf facility were included in cost of sales – product, until commercial production resumed in mid-
2018 at which time these costs were recorded as raw materials inventory. 

46 

Leases 

We determine if an arrangement includes a lease at inception. Operating leases are included in operating lease right-of-

use assets, other current liabilities and long-term portion of lease liabilities in our consolidated balance sheets. Right-of-use 
assets represent our right to use an underlying asset during the lease term and lease liabilities represent our obligation to make 
lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease 
commencement date based on the present value of lease payments over the lease term. In determining the net present value of 
lease payments, we use our incremental borrowing rate which represents an estimated rate of interest that we would have to 
pay to borrow equivalent funds on a collateralized basis at the lease commencement date. 

The operating lease right-of-use assets also include any lease payments made and exclude any lease incentives. Our 

leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain 
that we will exercise any such options. Lease expense is recognized on a straight-line basis over the expected lease term. We 
have elected not to apply the recognition requirements of ASC 842 for short-term leases. We have also elected the practical 
expedient to not separate lease components from non-lease components. 

As lessors, we determine if an arrangement includes a lease at inception. We elected the practical expedient to not 
separate lease components from non-lease components. Rent revenue is recognized on a straight-line basis over the expected 
lease term and is included in other income (expense) in our consolidated statements of operations. 

Recent Accounting Pronouncements  

Accounting Standards Update 2016-13 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 

2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. The 
standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses 
are recorded. For public business entities, excluding smaller reporting companies, this ASU is effective for fiscal years 
beginning after December 15, 2019. Furthermore, the one-time determination of whether an entity is eligible to be a smaller 
reporting company shall be based on an entity’s most recent determination as of November 15, 2019, in accordance with SEC 
regulations. Because we were a smaller reporting company based on the most recent determination as of November 15, 2019, 
this ASU and its subsequent updates, will be effective for fiscal years beginning after December 15, 2022. We are currently 
evaluating the impact this standard will have on our consolidated financial statements. 

Accounting Standards Update 2019-12 

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). 

This ASU simplifies the accounting for income taxes by removing certain exceptions and improving consistent application in 
certain areas of Topic 740. The ASU is effective for annual periods beginning after December 15, 2020 with early adoption 
permitted. We adopted this ASU on January 1, 2021 and the adoption of this standard did not have a material impact on our 
consolidated financial statements. 

Accounting Standards Update 2020-06 

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-

20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible 
Instruments and Contracts in an Entity’s Own Equity. This ASU simplifies the accounting for convertible instruments. This 
ASU also requires entities to use the if-converted method for all convertible instruments in calculating diluted earnings-per-
share. The ASU is effective for annual periods beginning after December 15, 2021 with early adoption permitted. We are 
currently evaluating the impact this standard will have on our consolidated financial statements. 

47 

 
 
Results of Operations  

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. We sell our novel adjuvant, CpG 1018, to our collaboration partners 
for use in their development and/or commercialization of COVID-19 vaccine. Overall, product revenue, net, reflects our best 
estimates of the amount of consideration to which we are entitled based on the terms of the contract.  

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. 

The following is a summary of our revenues (in thousands, except for percentages): 

Year Ended December 31, 

2020 

      2019 

      2018 

3,277        

   $  36,030      $  34,644      $ 
-        
   $  39,307      $  34,644      $ 
575        
   $  46,551      $  35,219      $ 

7,244        

Increase 
(Decrease) from 
2019 to 2020 
      % 
$ 
1,386        
6,812      $ 
3,277     
-        
4,663        
6,812      $ 
6,669        
1,386        
8,198      $  11,332        

Increase 
(Decrease) from 
2018 to 2019 
      % 
$ 
4 %    $  27,832        

NM   

-     

1160 %      

13 %    $  27,832        
(811 )      
32 %    $  27,021        

409 % 
NM   
409 % 
(59 )% 
330 % 

Revenues: 
HEPLISAV-B 
CpG 1018 

Total product revenue, net 

Other revenue 

Total revenues 

NM = Not meaningful 

2020 versus 2019 

HEPLISAV-B revenue for the year ended December 31, 2020 increased primarily due to an increase in sales volume. 

Due to the ongoing COVID-19 global pandemic, most medical centers restricted access to their facilities and focused on 
providing care to only the most severely affected patients beginning in mid-March 2020, which significantly lowered our 
sales volume in the second quarter. Utilization of adult vaccines, including HEPLISAV-B, improved in the second half of the 
year as health care providers gradually expanded their services under strict social distancing rules and our distributors 
replenished their inventory. Sales fluctuations during the second half of 2020 also included initial stocking orders from a 
large retail chain and another customer and the effect of seasonal Department of Defense purchases. During the fourth quarter 
of 2020, based on an analysis of historical product returns and customer ordering patterns, we decreased our returns reserve 
resulting in an increase in HEPLISAV-B product revenue, net of approximately $0.8 million.  

Overall, vaccine utilization is expected to decline significantly in the first quarter of 2021 from the fourth quarter of 
2020 to approximately 50% of pre-pandemic levels, which will result in a decrease in HEPLISAV-B revenues in the first 
quarter of 2021 compared to the fourth quarter of 2020. Utilization of adult vaccines will continue to be impacted throughout 
the first half of 2021 but is expected to return to pre-pandemic levels in the second half of 2021. 

In the third quarter of 2020, we began selling our novel adjuvant, CpG 1018, to our collaboration partners for their use 

in development and/or commercialization of COVID-19 vaccines.  

In September 2020, we received $6.3 million from the Coalition for Epidemic Preparedness Innovations (“CEPI”) to 

scale up our CpG 1018 production and to make available certain quantities of CpG 1018 for purchases to CEPI and its 
partners. In October 2020, CEPI terminated the agreement and we recognized the $6.3 million in other revenue.  

Other revenue also included collaboration revenue related to services performed under a collaboration agreement with 

Serum Institute of India Pvt. Ltd. and manufacturing service revenue. 

48 

  
       
         
         
    
  
  
  
  
       
         
         
    
  
  
  
  
  
    
  
  
  
  
    
  
  
  
     
    
     
2019 versus 2018 

For the year ended December 31, 2019, product revenue, net increased due to higher volume as additional healthcare 
providers completed operational activities required to switch to HEPLISAV-B and existing customers placed repeat orders.  

Included in other revenue was collaboration revenue related to services performed in 2019 under a collaboration 
agreement with Serum Institute of India Pvt. Ltd. Other revenue also included manufacturing service revenue of $0.4 million.  

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 pre-filled syringes (“PFS”) of HEPLISAV-B and inventory costs to produce CpG 1018 for our 
collaboration partners. Our HEPLISAV-B PFS finished goods inventory previously included components for which a portion 
of the manufacturing costs were expensed to research and development prior to the approval of the PFS presentation by the 
FDA in March 2018. Substantially all the inventory that was previously expensed to research and development has been sold 
to customers. The following is a summary of our cost of sales - product (in thousands, except for percentages): 

Cost of sales - product 

   $  11,410      $  10,172      $  10,934      $ 

Year Ended December 31, 

2020 

      2019 

      2018 

2020 versus 2019 

Increase 
(Decrease) from 
2019 to 2020 
$ 
      % 
1,238        

12 %    $ 

Increase 
(Decrease) from 
2018 to 2019 
$ 
      % 
(762 )      

(7 )% 

For the year ended December 31, 2020, cost of sales-product increased, as compared to the same period in 2019, 
primarily due to higher unit costs as we produce and then sell inventory that reflects the full cost of manufacturing. Cost of 
sales – product for the year ended December 31, 2020 also includes $1.4 million of costs to produce CpG 1018 for our 
collaboration partners. The increase was offset by lower overhead costs and a charge in the third quarter of 2019 related to a 
terminated batch. 

We expect our cost of sales - product for HEPLISAV-B, as a percentage of product sales, net, to stabilize for the 

foreseeable future, excluding potential unknown one-time charges. We expect our cost of sales-product for CpG 1018 to 
increase substantially in 2021 due to increased production of CpG 1018 for Valneva and other collaborators. 

2019 versus 2018 

Cost of sales - product for the year ended December 31, 2019 primarily included certain fill, finish and overhead costs 

for pre-filled syringes (“PFS”) of HEPLISAV-B and costs related to a terminated batch. Our HEPLISAV-B PFS finished 
goods inventory includes components for which a portion of the manufacturing costs were previously expensed to research 
and development prior to the approval of the PFS presentation by the FDA in March 2018.    

At December 31, 2019, inventories, net increased to $41.3 million from $19.0 million at December 31, 2018 to support 

increased projected sales. 

Cost of Sales - Amortization of Intangible Assets 

The following is a summary of our cost of sales – amortization of intangible assets (in thousands, except for 

percentages): 

Year Ended December 31, 

2020 

      2019 

      2018 

Increase 
(Decrease) from 
2019 to 2020 
      % 
$ 

Increase 
(Decrease) from 
2018 to 2019 
      % 
$ 

Cost of sales - amortization of 
   intangible assets 

$  2,500      $  9,217      $  10,862      $ 

(6,717 )      

(73 )%    $ 

(1,645 )      

(15 )% 

49 

 
  
     
  
       
  
       
  
     
  
  
  
  
     
  
       
  
       
  
     
  
  
  
  
  
    
  
  
  
  
  
    
  
  
  
 
  
     
  
       
  
       
  
     
  
  
  
  
     
  
       
  
       
  
     
  
  
  
  
  
    
  
  
  
  
  
    
  
  
  
  
2020 versus 2019 

Cost of sales - amortization of intangible assets consisted of amortization of the intangible asset recorded as a result of 
sublicense payments to Merck, Sharpe & Dohme Corp. (“Merck”), upon FDA approval of HEPLISAV-B in November 2017. 
The intangible asset was fully amortized as of April 2020 when the sublicense agreement expired. 

2019 versus 2018 

Cost of sales - amortization of intangible assets consisted of amortization of the intangible asset recorded as a result of 

a regulatory milestone and sublicense fees to Coley Pharmaceutical Group, Inc. (“Coley”), Merck and GlaxoSmithKline 
Biologicals SA (“GSK”), upon FDA approval of HEPLISAV-B in November 2017. The intangible assets related to Coley 
and GSK were fully amortized in 2018. 

Research and Development  

Research and development expense consists, primarily, of compensation and related personnel costs (which include 

benefits, recruitment, travel and supply costs), outside services, allocated facility costs and non-cash stock-based 
compensation. Outside services consist of costs associated with clinical development, process development, preclinical 
discovery and development, regulatory filings and research, including fees and expenses incurred by contract research 
organizations, clinical study sites, and other service providers.  

The following is a summary of our research and development expense (in thousands, except for percentages): 

Increase 
(Decrease) from 
2019 to 2020 
      % 
$ 

Increase 
(Decrease) from 
2018 to 2019 
      % 
$ 

   Year Ended December 31, 
      2019 
   2020 

      2018 

Research and Development: 
Compensation and related 
   personnel costs 
Outside services 
Facility costs 
Non-cash stock-based 
   compensation 
(7,058 )      
1,000        
Total research and development    $  28,607      $  62,331      $  74,951      $  (33,724 )      

   $  10,328      $  21,933      $  30,466      $  (11,605 )      
(9,373 )      
      16,064         25,437         28,213      $ 
(5,688 )      
6,668      $ 

9,604      $ 

8,058        

6,903        

1,215        

(53 )%    $ 
(37 )%      
(82 )%      

(8,533 )      
(2,776 )      
235        

(88 )%      
(1,546 )      
(54 )%    $  (12,620 )      

(28 )% 
(10 )% 
4 % 

(16 )% 
(17 )% 

2020 versus 2019 

Compensation and related personnel costs and non-cash stock-based compensation decreased due to lower research and 

development headcount as a result of our restructuring in May 2019. In addition, non-cash stock-based compensation 
included reversal of expenses related to cancellation of certain equity grants in the first quarter of 2020.  

The decrease in outside services was primarily the result of winding down of our immuno-oncology programs, partially 

offset by an increase in outside services due to CpG 1018 development costs at our third-party manufacturing facility to 
support increased CpG 1018 demand from our collaboration partners for use in their development and/or commercialization 
of their COVID-19 vaccine candidates. 

Facility costs, which are primarily comprised of occupancy and related expenses, decreased due to lower overhead 
allocation to research and development functions. In addition, facility costs for year ended December 31, 2019 included 
accelerated depreciation in connection with the restructuring in May 2019.   

2019 versus 2018 

Compensation and related personnel costs and non-cash stock-based compensation decreased in the 2019 periods 
compared to the 2018 periods due to lower research and development headcount as a result of our restructuring in May 2019. 
Outside services in 2019 decreased as compared to the comparable period in 2018 due to an overall reduction in costs to 
support the development of SD-101 and earlier stage immuno-oncology programs after the restructuring.   

50 

  
  
    
  
       
  
       
  
     
  
  
  
  
    
  
       
  
       
  
     
  
  
  
  
     
  
  
  
     
  
  
  
     
     
Selling, General and Administrative  

Selling, general and administrative expense consists 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. 

The following is a summary of our selling, general and administrative expenses (in thousands, except for percentages): 

   Year Ended December 31, 

Increase 
(Decrease) from 
2019 to 2020 

Increase 
(Decrease) from 
2018 to 2019 

   2020 

      2019 

      2018 

$ 

      % 

$ 

      % 

   $  31,191      $  28,525      $  15,993      $ 
      24,759         26,269         31,758        
2,792        
2,466        

2,296        
      11,425        

2,293        
7,675        

2,666        
(1,510 )      
3        
3,750        

9 %     $  12,532        
(5,489 )      
(6 )%      
(499 )      
0 %       
5,209        
49 %       

78 % 
(17 )% 
(18 )% 
211 % 

9,585         10,224         11,761        

(639 )      

(6 )%      

(1,537 )      

(13 )% 

   $  79,256      $  74,986      $  64,770      $ 

4,270        

6 %     $  10,216        

16 % 

Selling, General and 
   Administrative: 
Compensation and related 
   personnel costs 
Outside services 
Legal costs 
Facility costs 
Non-cash stock-based 
   compensation 
Total selling, general and 
   administrative 

2020 versus 2019 

The increase in compensation and related personnel costs was due to higher headcount resulting from the conversion of 

the external sales force to our employees effective April 1, 2019, offset by the decrease in business travel due to COVID-19 
travel restrictions.  

Outside services decreased due to the conversion of the external sales force to our employees effective April 1, 2019 

and decrease in costs related to HEPLISAV-B post-marketing studies due to earlier completion of certain milestones in 2019. 
The decrease was offset by the $2.5 million payment to Symphony Dynamo, Inc. and Symphony Dynamo Holdings LLC 
(“Holdings”) in connection with the sale of our immuno-oncology compound, SD-101 and an overall increase in costs for 
sales and marketing activities. The $2.5 million payment was required under our agreement with Holdings entered into in 
November 2009. 

Facility costs, which are primarily comprised of occupancy and related expenses, increased primarily due to higher 

overhead allocation to selling, general and administrative functions.  

Non-cash stock-based compensation decreased due to the retirement of our former CEO in August 2019 and included 

reversal of expenses related to cancellation of certain equity grants in the first quarter of 2020. The decrease was partially 
offset by the increase in headcount.  

2019 versus 2018 

The increase in compensation and related personnel costs and the related decrease in outside services was due to the 

conversion of the external sales force to our employees effective April 1, 2019. The corresponding decrease in outside 
services was partially offset by an increase in post-marketing study costs for completion of certain milestones in the 
HEPLISAV-B post marketing study, and costs for increased sales and marketing activities. Legal costs decreased primarily 
due to outside counsel costs incurred in the first quarter of 2018 in connection with the loan financing. Facility costs, which 
include an overhead allocation of occupancy and related expenses, increased primarily due to additional rent costs pursuant to 
our 5959 Horton Street lease. Non-cash stock-based compensation decreased compared to the prior period due to the timing 
of vesting of certain stock awards granted in 2017.  

51 

  
  
    
  
       
  
       
  
     
  
  
  
  
    
  
       
  
       
  
     
  
  
  
  
     
  
  
  
     
  
  
  
     
     
 
Gain on Sale of Assets 

In July 2020, we sold assets related to our immuno-oncology compound, SD-101, which included intellectual property, 

clinical and non-clinical data, regulatory filings, clinical supply inventory and certain contracts to TriSalus. Pursuant to the 
Asset Purchase Agreement, we received $5 million upon closing of the transaction and $4 million in December 2020 as 
reimbursement for certain clinical trial expenses. In addition, we could receive up to an additional $250 million upon the 
achievement of certain development, regulatory, and commercial milestones and low double-digit royalties based on potential 
future net sales of product containing SD-101 compound.  

In the third quarter of 2020, we recognized a gain on sale of SD-101 assets of $6.9 million, net of transaction costs.   

Restructuring 

On May 23, 2019, we implemented a strategic organizational restructuring, principally to align our operations around 
our vaccine business and significantly curtail further investment in our immuno-oncology business. In connection with the 
restructuring, we reduced our workforce by approximately 80 positions, or by approximately 36%, of U.S.-based personnel. 
We have completed our restructuring activities and recognized restructuring costs of $13.4 million in 2019.   

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 and end of term fee 
related to our long-term debt agreement. Sublease income is recognized in connection with our sublease of office and 
laboratory space. Change in fair value of warrant liability reflects the changes in fair value of warrants issued in connection 
with equity financing in August 2019. Other includes gains and losses on foreign currency transactions and disposal of 
property and equipment. 

The following is a summary of our other income (expense) (in thousands, except for percentages): 

Year Ended December 31, 

2020 

      2019 

      2018 

   $  1,260      $  3,370      $ 
   $  (19,062 )    $  (16,977 )    $ 
   $  7,706      $  2,619      $ 

3,828      $ 
(9,338 )    $ 
-      $ 

Increase 
(Decrease) from 
2019 to 2020 
$ 
      % 
(2,110 )      
2,085        
5,087        

(63 )%    $ 
12 %     $ 
194 %     $ 

Increase 
(Decrease) from 
2018 to 2019 
$ 
      % 
(458 )      
7,639        
2,619     

(12 )% 
82 % 

NM   

   $  4,124      $ 
(897 )    $ 
   $ 

(7,500 )    $ 
731      $ 

-      $  11,624        
(1,628 )      

(70 )    $ 

155 %     $ 
(223 )%    $ 

7,500     

801        

NM   
1,144 % 

Interest income 
Interest expense 
Sublease income 
Change in fair value of 
   warrant liability 
Other 

NM = Not meaningful  

2020 versus 2019 

Interest income decreased primarily due to lower yields on our marketable securities portfolio. Interest expense 

increased due to the borrowing of the remaining $75.0 million in March 2019 under the term loan agreement with CRG 
Servicing LLC (“Loan Agreement”). Sublease income increased in connection with our sublease of office and laboratory 
space located at 5959 Horton Street, Emeryville, California to a third party in July 2019. The change in the fair value of the 
warrant liability was primarily due to a decrease in our stock price. The change in other was primarily due to foreign currency 
transactions and related fluctuations in the value of the Euro compared to the U.S. dollar.  

2019 versus 2018 

Interest expense increased due to the borrowing of the remaining $75.0 million in March 2019 under the Loan 
Agreement. We recognized sublease income of $2.6 million in connection with our sublease of office and laboratory space 
located at 5959 Horton Street, Emeryville, California to a third party in July 2019. The change in the fair value of the warrant 
liability was primarily due to increase in our stock price. The change in other was primarily due to foreign currency 
transactions and related fluctuations in the value of the Euro compared to the U.S. dollar.  

52 

 
  
       
         
         
    
  
  
  
  
       
         
         
    
  
  
  
  
  
    
  
  
  
  
  
    
  
  
  
Liquidity and Capital Resources 

As of December 31, 2020, we had $165.0 million in cash, 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. Our funds are 
currently invested in money market funds, U.S. treasuries, U.S. government agency securities and corporate debt securities. 
We currently anticipate that our cash, cash equivalents and short-term marketable securities as of December 31, 2020, and 
anticipated revenues from HEPLISAV-B and CpG 1018 will be sufficient to fund our operations for at least the next 12 
months from the date of this filing. 

Pursuant to our supply agreement with Valneva, in the fourth quarter of 2020, we received payments from Valneva 

totaling $20.0 million and issued an invoice to Valneva for $17.1 million for advanced payment to purchase specified 
quantities of CpG 1018 adjuvant in the first half of 2021. We recorded the total amount of $37.1 million as deferred revenue 
in our consolidated balance sheets as of December 31, 2020. 

In February 2018, we entered into a term loan agreement with CRG Servicing LLC. At December 31, 2020, the 

principal amount of the term loan was $180.9 million, excluding debt discount of $1.1 million. The loan and the related 
unpaid interest and fees are due in December 2023. 

In May 2020, we completed an underwritten public offering of 16,100,000 shares of our common stock at a public 

offering price of $5.00 per share. The net proceeds from this offering were approximately $75.4 million, after deducting the 
underwriting discount and other offering expenses. 

For the year ended December 31, 2020, we sold 8,005,467 shares of our common stock and received net cash proceeds 
of $32.3 million pursuant to a 2017 At Market Sales Agreement with Cowen and Company, LLC (“2017 ATM Agreement”) 
that terminated in August 2020. 

On August 6, 2020, we entered into an at-the-market Sales Agreement (the “2020 ATM Agreement”) with Cowen and 

Company, LLC (“Cowen”), under which we may offer and sell from time to time, at our sole discretion, shares of our 
common stock having an aggregate offering price of up to $150 million through Cowen as our sales agent. For the year ended 
December 31, 2020, we received net cash proceeds of $0.8 million resulting from sales of 109,176 shares of our common 
stock pursuant to the 2020 ATM Agreement. As of December 31, 2020, we had $149.1 million remaining under the 2020 
ATM Agreement. Subsequent to December 31, 2020 and through February 22, 2021, we sold 2,299,952 shares of common 
stock for net proceeds of $22.7 million under the 2020 ATM Agreement.  

We expect to incur operating losses for the foreseeable future as we continue to invest in commercialization of 

HEPLISAV-B and CpG 1018. If we cannot generate a sufficient amount of revenue from product sales, we will need to 
finance our operations through strategic alliance and licensing arrangements and/or future public or private debt and equity 
financings. Raising additional funds through the issuance of equity or debt securities could result in dilution to our existing 
stockholders, increased fixed payment obligations, or both. In addition, these securities may have rights senior to those of our 
common stock and could include covenants that would restrict our operations. 

Our ability to raise additional capital in the equity and debt markets, should we choose to do so, is dependent on a 
number of factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number 
of development and business risks and uncertainties, our creditworthiness and the uncertainty that we would be able to raise 
such additional capital at a price or on terms that are favorable to us. In addition, our ability to raise additional funds may be 
adversely impacted by deteriorating global economic conditions and the recent disruptions to and volatility in the credit and 
financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. Adequate financing 
may not be available to us on acceptable terms, or at all. If adequate funds are not available when needed, we may need to 
significantly reduce our operations while we seek strategic alternatives, which could have an adverse impact on our ability to 
achieve our intended business objectives. 

2020 versus 2019 

During the year ended December 31, 2020, we used $92.3 million of cash for our operations primarily due to our net 

loss of $75.2 million, of which $21.6 million consisted of non-cash items which included stock-based compensation, 
depreciation and amortization, change in fair value of warrant liability, amortization of right-of-use assets, non-cash interest 
expense, amortization of intangible assets and accretion and amortization on marketable securities. By comparison, during 
the year ended December 31, 2019, we used $121.3 million of cash for our operations primarily due to our net loss of $152.6 
million, of which $58.0 million consisted of non-cash charges such as stock-based compensation, amortization of intangible 
assets, depreciation and amortization, change in fair value of warrant liability, non-cash interest expense, amortization of 
right-of-use assets and accretion and amortization on marketable securities. Cash used in our operations during 2020 
decreased by $29.0 million. For the year ended December 31, 2020, we received tenant improvement reimbursements from 
the landlord of 5959 Horton Street totaling $1.1 million, invested approximately $22.4 million in HEPLISAV-B inventory 
and approximately $30.4 million to scale up CpG 1018 production. Net cash used in operating activities is also impacted by 
changes in our operating assets and liabilities due to timing of cash receipts and expenditures. 

53 

During the year ended December 31, 2020 and 2019, net cash used in investing activities was $26.5 million and $42.8 

million, respectively. Cash used in investing activities during 2020 included $22.3 million of net purchases of marketable 
securities compared to $13.4 million of net purchases of marketable securities during 2019. During each of 2020 and 2019, 
we paid $7.0 million of sublicense payment to Merck. Cash used in net purchases of property plant and equipment decreased 
by $18.3 million during 2020 compared 2019. The decrease was, primarily, due to the installation of facility improvements in 
2019. In addition, in 2020, we received $6.9 million from the sale of SD-101 assets, net of transaction costs. 

During the year ended December 31, 2020 and 2019, net cash provided by financing activities was $109.5 million and 
$154.4 million, respectively. Cash provided by financing activities for 2020 included net proceeds of $75.4 million from our 
underwritten public offering in May 2020, $32.3 million from our, now terminated, 2017 ATM Agreement and $0.8 million 
from our 2020 ATM Agreement. Cash provided by financing activities for the year ended December 31, 2019 included net 
proceeds of $74.3 million from the second tranche of the Loan Agreement, net proceeds of $52.0 million and $13.6 million 
from the issuance of common stock and Series B Convertible Preferred Stock, respectively, from our underwritten public 
offering in August 2019 and net proceeds of $13.9 million from the issuance of common stock under our 2017 ATM 
Agreement. 

2019 versus 2018 

During the year ended December 31, 2019, we used $121.3 million of cash for our operations primarily due to our net 

loss of $152.6 million, of which $58.0 million consisted of non-cash charges such as stock-based compensation, amortization 
of intangible assets, depreciation and amortization, change in fair value of warrant liability, non-cash interest expense, 
amortization of right-of-use assets and accretion and amortization on marketable securities. During the year ended December 
31, 2018, we used $131.3 million of cash for our operations primarily due to our net loss of $158.9 million, of which $39.3 
million consisted of non-cash charges such as stock-based compensation, amortization of intangible assets, depreciation and 
amortization, non-cash interest expense and accretion and amortization on marketable securities. Cash used in our operations 
during 2019 decreased by $10.0 million. For the year ended December 31, 2019, we received tenant improvement 
reimbursements from the landlord of 5959 Horton Street totaling $7.0 million. During the year ended December 31, 2019, we 
invested approximately $22.3 million in HEPLISAV-B inventory to support increased projected sales. Net cash used in 
operating activities is impacted by changes in our operating assets, and liabilities due to timing of cash receipts and 
expenditures. 

During the year ended December 31, 2019, cash used in investing activities was $42.8 million compared to $55.5 
million of cash provided by investing activities for the year ended December 31, 2018. Cash used in investing activities 
during the year ended December 31, 2019 included $13.4 million of net purchases of marketable securities compared to 
$70.7 million of net proceeds from maturities of marketable securities during 2018. During the year ended December 31, 
2019, we paid $7.0 million of sublicense payment Merck compared to $11.0 million of milestone and sublicense payments to 
Coley, Merck and GSK during 2018. Net cash used in the purchases of property plant and equipment increased by $18.2 
million from 2018 to 2019. The increase is, primarily, due to the installation of facility improvements. 

During the year ended December 31, 2019 and 2018, net cash provided by financing activities was $154.4 million and 

$99.1 million, respectively. Cash provided by financing activities for the year ended December 31, 2019 included net 
proceeds of $74.3 million from the second tranche of the Loan Agreement, net proceeds of $52.0 million and $13.6 million 
from the issuance of common stock and Series B Convertible Preferred Stock, respectively, from our underwritten public 
offering in August 2019 and net proceeds of $13.9 million from the issuance of common stock under our 2017 ATM 
Agreement. During the year ended December 31, 2018, we received net cash proceeds of $99.0 million from the Loan 
Agreement.  

Contractual Obligations  

The following summarizes our significant contractual obligations at December 31, 2020 and the effect those 

obligations are expected to have on our liquidity and cash flows in future periods (in thousands):   

Contractual Obligations: 
Operating leases 
Long-term debt obligation 
Purchase commitments 
Total contractual obligations 

Total 

2021 

2022- 
2023 

      2024-2025       

   $ 

   $ 

60,616      $ 
188,141        
21,948        
270,705      $ 

6,942      $ 
-        
21,948        
28,890      $ 

11,671      $ 
188,141        
-        
199,812      $ 

2026 and 
Thereafter    
30,760   
-   
-   
30,760   

11,243      $ 
-        
-        
11,243      $ 

We lease our facilities in Emeryville, California and Düsseldorf, Germany.  

54 

  
  
     
     
     
     
 
In July 2019, we entered into an agreement to sublease 23,976 square feet of office space located at 2100 Powell Street, 

Emeryville, California for our new global headquarters. This sublease agreement will continue until June 30, 2022. As of 
December 31, 2020, we are obligated to make lease payments totaling $1.8 million, plus any operating expenses and taxes 
over the lease term. 

In September 2018, we entered into an agreement to lease 75,662 square feet of laboratory and office space located at 

5959 Horton Street, Emeryville, California at the rate of $4.75 per square foot, paid on a monthly basis (“Horton Street 
Lease”). As of December 31, 2020, we are obligated to make lease payments totaling $53.6 million, plus any operating 
expenses and taxes over the Horton Street Lease term. In July 2019, we entered into an agreement to sublease the entire 
75,662 square feet to a third party at the rate of $5.50 per square foot, paid on a monthly basis (“Horton Street Sublease”). 
Both the Horton Street Lease and the Horton Street Sublease will continue until March 31, 2031. 

We also lease our facility in Düsseldorf, Germany (“Düsseldorf Lease”) under an operating lease that expires in March 

2023 with an option to renew for two five-year term. As of December 31, 2020, we are obligated to make lease payments 
totaling $4.2 million, plus any operating expenses and taxes over the lease term. During 2004, we also established a letter of 
credit with Deutsche Bank as security for our Düsseldorf Lease in the amount of €0.2 million (Euros). The letter of credit 
remained outstanding through December 31, 2020 and is collateralized by a certificate of deposit for €0.2 million which has 
been included in restricted cash in the consolidated balance sheets as of December 31, 2020 and 2019. 

On February 20, 2018, we entered into a $175.0 million term loan agreement (“Loan Agreement”) with CRG Servicing 

LLC. We borrowed $100.0 million under the Loan Agreement at closing and the remaining $75.0 million in March 2019 
(collectively, “Term Loans”). At our option, until September 30, 2023, a portion of the interest payments may be paid in 
kind, and thereby added to the principal. Through December 31, 2020, a portion of our interest was paid in kind, which 
increased the principal amount of the Term Loans to $180.9 million, net of debt discount of $1.1 million. Included in our 
total contractual obligations of $188.1 million is the principal amount of $175.0 million, paid-in-kind interest of $5.9 million 
and the backend facility fee of $7.2 million. The Term Loans have a maturity date of December 31, 2023, unless earlier 
prepaid.  

We have entered into material purchase commitments with commercial manufacturers for the supply of HEPLISAV-B, 

CpG 1018 adjuvant and for clinical research. As of December 31, 2020, our material non-cancelable purchase and other 
commitments, for the supply of HEPLISAV-B, CpG 1018 and for clinical research totaled $21.7 million. 

In addition to the non-cancelable commitments included above, we have entered into contractual arrangements that 

obligate us to make payments to the contractual counterparties upon the occurrence of future events. In addition, in the 
normal course of operations, we have entered into license and other agreements and intend to continue to seek additional 
rights relating to compounds or technologies in connection with our discovery, manufacturing and development programs. 
Under the terms of the agreements, we may be required to pay future up-front fees, milestones and royalties on net sales of 
products originating from the licensed technologies, if any, or other payments contingent upon the occurrence of future 
events that cannot reasonably be estimated. 

We also rely on and have entered into agreements with research institutions, contract research organizations and 
clinical investigators as well as clinical material manufacturers. These agreements are terminable by us upon written notice. 
Generally, we are liable only for actual effort expended by the organizations at any point in time during the contract through 
the notice period. As of December 31, 2020, our non-cancelable obligation for services and materials provided by these 
organizations totaled $0.3 million.  

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 SD-101. In July 2020, we sold assets related to our SD-101 compound to TriSalus. We are obligated 
to pay Holdings 50% of the contingent pre-commercialization milestone payments that we may receive under the Asset 
Purchase Agreement. We paid $2.5 million to Holdings in August 2020. No liability has been recorded under this agreement 
as of December 31, 2020. 

Off-balance Sheet Arrangements  

We do not have any off-balance sheet arrangements as defined by rules enacted by the SEC and accordingly, no such 

arrangements are likely to have a current or future effect on our financial position.  

55 

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  
Quantitative and Qualitative Disclosure about Market Risk  
Interest Rate Risk  

We are subject to interest rate risk. Our investment portfolio is maintained in accordance with our investment policy, 

which defines allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. 
The primary objective of our investment activities is to preserve principal and, secondarily, to maximize income we receive 
from our investments without significantly increasing risk. Some of the securities that we invest in may have market risk. 
This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To 
minimize this risk, we maintain our portfolio of cash equivalents and investments in short-term money market funds, U.S. 
government agency securities, U.S. treasuries and corporate debt securities. We do not invest in auction rate securities or 
securities collateralized by home mortgages, mortgage bank debt or home equity loans. We do not have derivative financial 
instruments in our investment portfolio. To 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 $1.2 million or 
$1.5 million, respectively. 

Due to the short duration and nature of our cash equivalents and marketable securities, as well as our intention to hold 

the investments to maturity, we do not expect any material loss with respect to our investment portfolio.  

Foreign Currency Risk  

We have certain investments outside the U.S. for the operations of Dynavax GmbH and Dynavax India LLP with 

exposure to foreign exchange rate fluctuations. The cumulative translation adjustment reported in the consolidated balance 
sheet as of December 31, 2020 was $0.2 million primarily related to the translation of Dynavax GmbH assets, liabilities and 
operating results from Euros to U.S. dollars. As of December 31, 2020, 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. 

56 

 
 
 
ITEM 8.  

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS  

Report of Independent Registered Public Accounting Firm ................................................................................................

   Page No. 
58 

Consolidated Financial Statements: 

Consolidated Balance Sheets ......................................................................................................................................................

60 

Consolidated Statements of Operations ................................................................................................................................

61 

Consolidated Statements of Comprehensive Loss ......................................................................................................................

61 

Consolidated Statements of Stockholders’ Equity ......................................................................................................................

62 

Consolidated Statements of Cash Flows ................................................................................................................................

63 

Notes to Consolidated Financial Statements ...............................................................................................................................

64 

57 

  
  
   
  
    
  
   
  
   
  
   
  
   
  
   
  
   
 
 
Report of Independent Registered Public Accounting Firm 

To the Stockholders and the Board of Directors of Dynavax Technologies Corporation 

Opinion on the Financial Statements  

We have audited the accompanying consolidated balance sheets of Dynavax Technologies Corporation (the Company) as of 
December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity 
and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred 
to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all 
material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and 
its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted 
accounting principles. 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) 
(PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in 
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 
(2013 framework), and our report dated February 25, 2021 expressed an unqualified opinion thereon. 

Basis for Opinion 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion 
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and 
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the 
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due 
to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial 
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included 
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also 
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the 
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 

Critical Audit Matters 

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that 
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that 
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The 
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, 
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the 
critical audit matter or on the accounts or disclosures to which it relates. 

Reserves for returns on product revenue 

Description of the 
Matter 

  During the year ended December 31, 2020, the Company’s net product revenues were $39.3 million. 
As explained in Note 2 of the consolidated financial statements, revenue from product sales includes 
estimates of variable consideration for which reserves are established, including reserves for product 
returns.  

Auditing the Company’s measurement of reserves for product returns under its contracts with 
wholesalers and specialty distributors (collectively, “Customers”) was challenging because (1) the 
calculation involves management assumptions about inventory remaining in the distribution channel 
(i.e., units held by Customers) as of the balance sheet date that could be subject to return in future 
periods under the Company’s returns policy, and (2) the Company has limited returns history on which 
to base its assumptions.   

58 

How We 
Addressed the 
Matter in Our 
Audit 

  We obtained an understanding, evaluated the design and tested the operating effectiveness of internal 
controls that identified risks related to the Company’s process used to determine reserves for returns 
on product revenue. For example, we tested controls over management’s review of the completeness 
and accuracy of the data used in the process, the assumptions about Customers reorder patterns and 
units in the channel as of the balance sheet date.   

To test the Company’s reserves for returns on product revenue, our audit procedures included, among 
other procedures, testing the accuracy and completeness of the underlying data used in the calculations 
and evaluating the assumptions used by management to estimate its reserves. To test management’s 
assumptions, we inspected agreements with significant Customers to validate the rights of return 
policy, obtained written representations from members of the commercial and sales functions 
regarding changes to the terms and conditions reported to the legal and accounting departments, 
examined credit memos issued during and after year end for unusual items or trends not consistent 
with the Company’s analysis of product returns, performed revenue cutoff testing at period end to 
assess whether there were unusual trends that should have been considered in the Company analysis of 
product returns, compared the shipment reports to Customers sell through information to assess the 
extent of inventory in the distribution channel and examined Customers reorder information. We also 
performed sensitivity analyses over the Company’s return rate to assess the effect of changes in 
assumptions.    

/s/ Ernst & Young LLP 

We have served as the Company's auditor since 2002. 

San Francisco, California 

February 25, 2021 

59 

 
 
 
 
 
DYNAVAX TECHNOLOGIES CORPORATION 

CONSOLIDATED BALANCE SHEETS  

(In thousands, except per share amounts)  

Assets 
Current assets: 

Cash and cash equivalents 
Marketable securities available-for-sale 
Accounts and other receivables, net 
Inventories, net 
Prepaid manufacturing 
Prepaid expenses and other current assets 

Total current assets 
Property and equipment, net 
Intangible assets, net 
Operating lease right-of-use assets 
Goodwill 
Restricted cash 
Other assets 
Total assets 
Liabilities and stockholders’ equity 
Current liabilities: 

Accounts payable 
Accrued research and development 
Accrued liabilities 
Warrant liability 
Deferred revenue 
Other current liabilities 

   $ 

   $ 

   $ 

Total current liabilities 
Long-term debt, net of debt discount of $1,094 and $1,394 at December 31, 2020 
   and 2019, respectively 
Long-term portion of lease liabilities 
Other long-term liabilities 
Total liabilities 
Commitments and contingencies (Note 9) 
Stockholders’ equity: 

Preferred stock: $0.001 par value 

Authorized: 5,000 shares; Issued and outstanding: 
Series B Convertible Preferred Stock — 4 shares and 5 shares at 
   December 31, 2020 and 2019, respectively 

Common stock: $0.001 par value; 278,000 shares and 139,000 shares authorized 
   at December 31, 2020 and 2019, respectively; 110,190 shares and 83,871 
shares issued 
    and outstanding at December 31, 2020 and 2019, respectively 
Additional paid-in capital 
Accumulated other comprehensive gain (loss) 
Accumulated deficit 
Total stockholders’ equity 
Total liabilities and stockholders’ equity 

   $ 

See accompanying notes. 

60 

December 31, 

2020 

2019 

32,073      $ 
132,963        
22,661        
63,689        
29,423        
9,206        
290,015        
30,567        
-        
26,583        
2,297        
237        
3,573        
353,272      $ 

3,312      $ 
2,805        
19,099        
10,736        
38,212        
3,247        
77,411        

179,811        
34,789        
2,568        
294,579        

39,884   
111,171   
8,886   
41,332   
-   
7,380   
208,653   
32,022   
2,500   
30,252   
2,081   
216   
3,344   
279,068   

9,278   
4,120   
14,802   
14,860   
-   
9,987   
53,047   

178,601   
37,845   
1,285   
270,778   

-        

-   

110        
1,352,374        
273        
(1,294,064 )      
58,693        
353,272      $ 

84   
1,229,417   
(2,387 ) 
(1,218,824 ) 
8,290   
279,068   

  
  
  
  
  
    
  
       
         
  
       
         
  
     
     
     
     
     
     
     
     
     
     
     
     
     
        
   
     
        
   
     
     
     
     
     
     
     
     
     
     
     
        
   
     
        
   
     
     
        
   
     
        
   
     
     
     
     
     
 
 
 
 
DYNAVAX TECHNOLOGIES CORPORATION 

CONSOLIDATED STATEMENTS OF OPERATIONS  

(In thousands, except per share amounts)  

Revenues: 

Product revenue, net 
Other revenue 

Total revenues 
Operating expenses: 

Cost of sales - product 
Cost of sales - amortization of intangible assets 
Research and development 
Selling, general and administrative 
Gain on sale of assets (Note 6) 
Restructuring 
Total operating expenses 
Loss from operations 
Other income (expense): 

Interest income 
Interest expense 
Sublease income 
Change in fair value of warrant liability (Note 14) 
Other 

Net loss 
Preferred stock deemed dividend 
Net loss allocable to common stockholders 
Basic net loss per share allocable to common stockholders 
Weighted average shares used to compute basic 
   net loss per share allocable to common stockholders 
Diluted net loss per share allocable to common stockholders 
Weighted average shares used to compute diluted 
   net loss per share allocable to common stockholders 

Year Ended December 31, 
2019 

2020 

2018 

   $ 

39,307      $ 
7,244        
46,551        

34,644      $ 
575        
35,219        

6,812   
1,386   
8,198   

11,410        
2,500        
28,607        
79,256        
(6,851 )      
-        
114,922        
(68,371 )      

1,260        
(19,062 )      
7,706        
4,124        
(897 )      
(75,240 )      
-        
(75,240 )    $ 
(0.75 )    $ 

10,172        
9,217        
62,331        
74,986        
-        
13,356        

170,062   
(134,843 )      

3,370        
(16,977 )      
2,619        
(7,500 )      
731        
(152,600 )      
(3,267 )      
(155,867 )    $ 
(2.16 )    $ 

10,934   
10,862   
74,951   
64,770   
-   
-   
161,517   
(153,319 ) 

3,828   
(9,338 ) 
-   
-   
(70 ) 
(158,899 ) 
-   
(158,899 ) 
(2.55 ) 

100,753        
(0.78 )    $ 

72,024        
(2.16 )    $ 

62,362   
(2.55 ) 

101,504        

72,024        

62,362   

   $ 
   $ 

   $ 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS  

(In thousands)  

Net loss 
Other comprehensive income (loss), net of tax: 

Reclassification of realized gain on available-for-sale securities 
   recognized in interest income 
Change in unrealized gain (loss) on marketable securities available-for-sale 
Cumulative foreign currency translation adjustments 

Total other comprehensive income (loss) 
Total comprehensive loss 

See accompanying notes.  

61 

Year Ended December 31, 
2019 
 $  (152,600 ) 

2020 
$  (75,240 ) 

2018 
 $  (158,899 ) 

(21 )   
(20 )   
2,701     
2,660   
$  (72,580 ) 

-     
140     
(512 )   
(372 ) 
 $  (152,972 ) 

-   
12   
(1,146 ) 
(1,134 ) 
 $  (160,033 ) 

 
  
  
  
  
  
     
     
  
     
        
          
  
     
     
     
        
        
   
     
     
     
     
     
     
     
   
     
     
        
        
   
     
     
     
     
     
     
     
     
     
 
 
 
  
  
  
    
    
  
    
    
    
    
    
  
  
  
  
  
  
  
  
  
  
  
   
   
 
DYNAVAX TECHNOLOGIES CORPORATION  

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 

(In thousands)  

Common Stock 

Preferred Stock 

Balances at December 31, 2017 

Issuance (withholding) of 
   common stock upon 
   exercise of stock options 
   and restricted stock 
   awards, net 
Issuance of common stock under 
   Employee Stock Purchase Plan 
Stock compensation expense 
Total other comprehensive loss 
Net loss 

Balances at December 31, 2018 

Issuance of common stock 
   upon exercise of stock 
   options and restricted 
   stock awards, net 
Issuance of common stock under 
   Employee Stock Purchase Plan 
Issuance of common stock, net of 
   issuance costs, in conjunction 
   with an underwritten public 
   offering and an At Market Sales 
   Agreement (see Note 14) 
Issuance of Series B Convertible 
   Preferred Stock, net of issuance 
   costs, in conjunction with an 
   underwritten public offering 
   (see Note 14) 
Stock compensation expense 
Total other comprehensive loss 
Net loss 

Balances at December 31, 2019 

Conversion of Preferred Stock 
Issuance of common stock 
   upon exercise of stock 
   options and restricted 
   stock awards, net 
Issuance of common stock under 
   Employee Stock Purchase Plan 
Issuance of common stock, net of 
   issuance costs, in conjunction 
   with an underwritten public 
   offering and an At Market Sales 
   Agreement (see Note 14) 
Stock compensation expense 
Total other comprehensive loss 
Net loss 

Balances at December 31, 2020 

   Shares 
     61,533      $ 

     Par Amount       Shares       Par Amount      

62        

-      $ 

Additional 
Paid-In 
Capital 
-      $  1,107,693      $ 

Accumulated 
Other 
Comprehensive 
(Loss) Income       
(881 )    $ 

Accumulated 
Deficit 

Total 
Stockholders' 
Equity 

(907,325 )    $ 

199,549   

1,204        

1        

-   

-        

(524 )      

-        

-        

(523 ) 

125        
-        
-        
-        
     62,862      $ 

-        
-        
-        
-        
63        

-   
-   
-   
-   
-      $ 

594        
-        
23,478        
-        
-        
-        
-        
-        
-      $  1,131,241      $ 

-        
-        
(1,134 )      
-        
(2,015 )    $ 

-        
-        
-        
(158,899 )      
(1,066,224 )    $ 

594   
23,478   
(1,134 ) 
(158,899 ) 
63,065   

975        

122        

1        

-        

-   

-   

-        

1        

-        

565        

-        

-        

-        

-        

2   

565   

     19,912        

20        

-   

-        

60,093        

-        

-        

60,113   

-        
-        
-        
-        
     83,871      $ 

700        

-        
-        
-        
-        
84        

1        

5   
-   
-   
-   
5      $ 

(1 ) 

12,061        
-        
25,456        
-        
-        
-        
-        
-        
-      $  1,229,417      $ 

-        

-        

-        
-        
(372 )      
-        
(2,387 )    $ 

-        
-        
-        
(152,600 )      
(1,218,824 )    $ 

-        

-        

12,061   
25,456   
(372 ) 
(152,600 ) 
8,290   

1   

1,209        

195        

1        

-        

-   

-   

-        

288        

-        

672        

-        

-        

-        

-        

289   

672   

     24,215        
-        
-        
-        
     110,190      $ 

24        
-        
-        
-        
110        

-   
-   
-   
-   
4      $ 

108,513        
-        
13,484        
-        
-        
-        
-        
-        
-      $  1,352,374      $ 

-        
-        
2,660        
-        
273      $ 

-        
-        
-        
(75,240 )      
(1,294,064 )    $ 

108,537   
13,484   
2,660   
(75,240 ) 
58,693   

See accompanying notes.  

62 

 
  
    
  
       
  
       
  
       
  
     
  
     
  
     
  
     
  
  
  
  
     
     
  
       
  
     
  
     
  
  
  
     
     
  
    
   
    
   
    
   
    
   
    
   
    
   
    
   
   
    
   
    
   
    
   
    
   
    
   
    
   
    
   
   
    
   
    
   
    
   
 
DYNAVAX TECHNOLOGIES CORPORATION 

CONSOLIDATED STATEMENTS OF CASH FLOWS  

(In thousands)  

Operating activities 
Net loss 
Adjustments to reconcile net loss to net cash used in operating activities: 

Depreciation and amortization 
Amortization of right-of-use assets 
(Gain) loss on disposal of property and equipment and from lease termination 
Amortization of premiums (accretion of discounts) on marketable 
   securities 
Realized gain on available-for-sale securities 
Change in fair value of warrant liability 
Stock compensation expense 
Cost of sales - amortization of intangible assets 
Non-cash interest expense 
Tenant improvements provided by the landlord 
Gain on sale of assets 

Changes in operating assets and liabilities: 

Accounts and other receivables, net 
Inventories, net 
Prepaid manufacturing 
Prepaid expenses and other current assets 
Other assets 
Accounts payable 
Lease liabilities 
Deferred revenue 
Accrued and other liabilities 

Net cash used in operating activities 
Investing activities 
Acquisition of technology licenses 
Purchases of marketable securities 
Proceeds from maturities and redemptions of marketable securities 
Proceeds from sales of marketable securities 
Purchases of property and equipment, net 
Proceeds from sale of assets, net of transaction costs 
Net cash (used in) provided by investing activities 
Financing activities 
Proceeds from long-term debt, net 
Proceeds from issuances of common stock, net 
Proceeds from issuances of preferred stock, net 
Proceeds (tax withholding) from exercise of stock options and restricted 
   stock awards, net 
Proceeds from Employee Stock Purchase Plan 
Net cash provided by financing activities 
Effect of exchange rate changes on cash, cash equivalents and restricted cash 
Net (decrease) increase in cash, cash equivalents and restricted cash 
Cash, cash equivalents and restricted cash at beginning of year 
Cash, cash equivalents and restricted cash at end of year 

Supplemental disclosure of cash flow information 
Cash paid during the year for interest 

Non-cash investing and financing activities: 

Non-cash acquisition of technology license 

Purchases of property and equipment, not yet paid 

Proceeds allocated to warrant liability at issuance 

Right-of-use assets obtained in exchange for operating lease liabilities 

Year Ended December 31, 
2019 

2020 

2018 

   $ 

(75,240 ) 

 $ 

(152,600 ) 

 $ 

(158,899 ) 

4,273   
2,562   
(98 ) 

535   
(57 ) 
(4,124 ) 
13,484   
2,500   
2,542   
1,137   
(6,851 ) 

(13,775 ) 
(22,357 ) 
(29,423 ) 
(1,826 ) 
(229 ) 
(3,448 ) 
(2,872 ) 
38,212   
2,804   
(92,251 ) 

(7,000 ) 
(201,786 ) 
148,565   
30,910   
(4,072 ) 
6,851   
(26,532 ) 

-   
108,538   
-   

289   
672   
109,499   
1,494   
(7,790 ) 
40,100   
32,310   

 $ 

8,938   
3,375   
18   

(1,462 ) 
-   
7,500   
25,456   
9,217   
4,973   
6,999   
-   

(5,182 ) 
(22,310 ) 
-   
(1,278 ) 
1,632   
4,848   
(2,000 ) 
-   
(9,376 ) 
(121,252 ) 

(7,000 ) 
(215,191 ) 
201,810   
-   
(22,401 ) 
-   
(42,782 ) 

74,250   
65,948   
13,586   

2   
565   
154,351   
(184 ) 
(9,867 ) 
49,967   
40,100   

 $ 

3,621   
-   
98   

(1,559 ) 
-   
-   
23,478   
10,862   
2,755   
-   
-   

(2,850 ) 
(18,710 ) 
-   
(2,405 ) 
(3,706 ) 
3,417   
-   
-   
12,597   
(131,301 ) 

(11,000 ) 
(213,804 ) 
284,457   
-   
(4,187 ) 
-   
55,466   

99,000   
-   
-   

(523 ) 
594   
99,071   
(482 ) 
22,754   
27,213   
49,967   

16,541   

 $ 

12,147   

 $ 

6,583   

-   

361   

-   

-   

 $ 

 $ 

 $ 

 $ 

-   

2,698   

7,360   

40,626   

 $ 

 $ 

 $ 

 $ 

12,773   

920   

-   

-   

   $ 

   $ 

   $ 

   $ 

   $ 

   $ 

See accompanying notes. 

63 

 
  
  
  
  
  
     
     
  
        
  
      
  
      
  
        
  
      
  
      
  
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
        
  
      
  
      
  
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
        
  
      
  
      
  
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
        
  
      
  
      
  
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
     
   
   
        
  
      
  
      
  
        
  
      
  
      
  
 
 
DYNAVAX TECHNOLOGIES CORPORATION  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  

1.  Organization  

Dynavax Technologies Corporation (“we,” “our,” “us,” “Dynavax” or the “Company”), is a commercial stage 

biopharmaceutical company focused on developing and commercializing novel vaccines. Our first marketed product, HEPLISAV-B® 
(Hepatitis B Vaccine (Recombinant), Adjuvanted) is approved by the United States Food and Drug Administration (“FDA”) for 
prevention of infection caused by all known subtypes of hepatitis B virus in adults age 18 years and older. We also manufacture and 
sell CpG 1018, the adjuvant used in HEPLISAV-B. We are working to develop CpG 1018 as a premier vaccine adjuvant through 
research collaborations and partnerships. Current collaborations are focused on adjuvanted vaccines for COVID-19, pertussis and 
universal influenza. We reincorporated in Delaware in 2000. 

Summary of Significant Accounting Policies  

2. 
Basis of Presentation and Principles of Consolidation 

The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) 
and include our accounts and those of our wholly-owned subsidiaries, Dynavax GmbH located in Düsseldorf, Germany and Dynavax 
India LLP in India. All significant intercompany accounts and transactions among the entities have been eliminated from the 
consolidated financial statements. We operate in one business segment: discovery, development and commercialization of novel 
vaccines. 

Liquidity and Financial Condition  

As of December 31, 2020, we had cash, cash equivalents and marketable securities of $165.0 million.  

The Company has incurred losses and negative cash flows from operations since its inception and expects to incur operating 
losses for the foreseeable future as we continue to invest in commercialization of HEPLISAV-B and development of our CpG 1018 
adjuvant. If we cannot generate a sufficient amount of revenue from product sales, we will need to finance our operations through 
strategic alliance and licensing arrangements and/or future public or private debt and equity financings. Adequate financing may not 
be available to us on acceptable terms, or at all. 

We currently anticipate that our cash, cash equivalents and short-term marketable securities as of December 31, 2020, and 
anticipated revenues from HEPLISAV-B and CpG 1018 will be sufficient to fund our operations for at least the next 12 months from 
the date of this filing. 

Our ability to raise additional capital in the equity and debt markets, should we choose to do so, is dependent on a number of 
factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number of development 
and business risks and uncertainties, our creditworthiness and the uncertainty that we would be able to raise such additional capital at a 
price or on terms that are favorable to us. Raising additional funds through the issuance of equity or debt securities could result in 
dilution to our existing stockholders, increased fixed payment obligations, or both. In addition, these securities may have rights senior 
to those of our common stock and could include covenants that would restrict our operations.  

Use of Estimates  

The preparation of financial statements in conformity with GAAP requires management to make informed estimates and 
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management’s 
estimates are based on historical information available as of the date of the consolidated financial statements and various other 
assumptions we believe are reasonable under the circumstances. Actual results could differ materially from these estimates. 

Foreign Currency Translation 

We consider the local currency to be the functional currency for our international subsidiaries, Dynavax GmbH and Dynavax 

India LLP. Accordingly, assets and liabilities denominated in this foreign currency are translated into U.S. dollars using the exchange 
rate in effect on the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during the year. 
Currency translation adjustments arising from period to period are charged or credited to accumulated other comprehensive income 
(loss) in stockholders’ equity.  

64 
 
 
 
 
As of December 31, 2020 and 2019, the cumulative translation adjustments balance was $0.2 million and $(2.5) million, 
respectively, primarily related to the translation of Dynavax GmbH assets, liabilities and operating results from Euros to U.S. dollars. 
For the years ended December 31, 2020, 2019 and 2018, we reported an unrealized gain (loss) of $2.7 million, $(0.5) million and 
$(1.1) million, respectively. Realized gains and losses resulting from currency transactions are included in other income (expense) in 
the consolidated statements of operations. For the years ended December 31, 2020, 2019 and 2018, we reported a (loss) gain of $(0.8) 
million, $0.2 million and $0.3 million, respectively, resulting from currency transactions in our consolidated statements of operations. 

Cash, Cash Equivalents and Marketable Securities  

We consider all liquid investments purchased with an original maturity of three months or less and that can be liquidated 
without prior notice or penalty to be cash equivalents. Management determines the appropriate classification of marketable securities 
at the time of purchase. In accordance with our investment policy, we invest in short-term money market funds, U.S. treasuries, U.S. 
government agency securities and corporate debt securities. We believe these types of investments are subject to minimal credit and 
market risk. 

We have classified our entire investment portfolio as available-for-sale and available for use in current operations and 

accordingly have classified all investments as short-term. Available-for-sale securities are carried at fair value based on inputs that are 
observable, either directly or indirectly, such as quoted market prices for similar securities; quoted prices in markets that are not 
active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the 
securities, with unrealized gains and losses included in accumulated other comprehensive loss in stockholders’ equity. Realized gains 
and losses and declines in value, if any, judged to be other than temporary on available-for-sale securities are included in interest 
income or expense. The cost of securities sold is based on the specific identification method. Management assesses whether declines 
in the fair value of investment securities are other than temporary. In determining whether a decline is other than temporary, 
management considers the following factors:  

  whether the investment has been in a continuous realized loss position for over 12 months;  

 

 

 

 

the duration to maturity of our investments;  

our intention and ability to hold the investment to maturity and if it is not more likely than not that we will be required to 
sell the investment before recovery of the amortized cost bases;  

the credit rating, financial condition and near-term prospects of the issuer; and  

the type of investments made.  

To date, there have been no declines in fair value that have been identified as other than temporary.  

Concentration of Credit Risk and Other Risks and Uncertainties  

Financial instruments that are subject to concentration of credit risk consist primarily of cash equivalents, marketable securities 

and accounts receivable.  

Our policy is to invest cash in institutional money market funds and marketable securities of the U.S. government and corporate 

issuers with high credit quality to limit the amount of credit exposure. We currently maintain a portfolio of cash equivalents and 
marketable securities in a variety of securities, including short-term money market funds, U.S. treasuries, U.S. government agency 
securities and corporate debt securities. We have not experienced any losses on our cash equivalents and marketable securities.  

Our accounts receivable balance consists, primarily, of amounts due from product sales. Accounts receivable are recorded net of 

reserves for chargebacks, distribution fees, trade discounts and doubtful accounts. We estimate our allowance for doubtful accounts 
based on an evaluation of the aging of our receivables. Accounts receivable balances are written off against the allowance when it is 
probable that the receivable will not be collected. To date, we have not recorded any allowance for doubtful accounts. 

Our product candidates will require approval from the FDA and foreign regulatory agencies before commercial sales can 

commence. There can be no assurance that our products will receive any of these required approvals. The denial or delay of such 
approvals may have a material adverse impact on our business and may impact our business in the future. In addition, after the 
approval of HEPLISAV-B by the FDA, there is still an ongoing risk of adverse events that did not appear during the drug approval 
process. 

We are subject to risks common to companies in the biopharmaceutical industry, including, but not limited to, new 

technological innovations, clinical development risk, establishment of appropriate commercial partnerships, protection of proprietary 

65 
 
technology, compliance with government and environmental regulations, uncertainty of market acceptance of product candidates, 
product liability, the volatility of our stock price and the need to obtain additional financing. 

During the years ended December 31, 2020, 2019 and 2018, 77%, 100% and 83%, respectively, of our revenues were earned in 
the United States. As of December 31, 2020 and 2019, 57% and 62%, respectively, of our long-lived assets were located in the United 
States and the remaining long-lived assets were located in Germany. 

Our source of product revenue consists of sales of HEPLISAV-B and CpG 1018.  

We sell HEPLISAV-B to a limited number of wholesalers and specialty distributors in the U.S. All of our HEPLISAV-B 

revenue is from these customers. For the years ended December 31, 2020, 2019 and 2018, our three largest customers collectively 
represented approximately 61%, 62% and 68% of our HEPLISAV-B product revenue, respectively. All of our CpG 1018 sales were 
outside the U.S. 

As of December 31, 2020 and 2019, our three largest customers collectively represented approximately 86% and 76% of our 

HEPLISAV-B trade receivable balance. 

Inventories  

Inventory is stated at the lower of cost or estimated net realizable value, on a first-in, first-out (“FIFO”), basis. We primarily use 
actual costs to determine our cost basis for inventories. Our assessment of market value requires the use of estimates regarding the net 
realizable value of our inventory balances, including an assessment of excess or obsolete inventory. We determine excess or obsolete 
inventory based on multiple factors, including an estimate of the future demand for our products, product expiration dates and current 
sales levels. 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. For the year ended December 31, 2020 and 2019, there were no inventory reserves recognized. During 2018, we recorded $1.0 
million in inventory reserves, which is included in cost of sales – product. 

We consider regulatory approval of product candidates to be uncertain and product manufactured prior to regulatory approval 

may not be sold unless regulatory approval is obtained. As such, the manufacturing costs for product candidates incurred prior to 
regulatory approval are not capitalized as inventory but are expensed as research and development costs. We begin capitalization of 
these inventory related costs once regulatory approval is obtained.  

HEPLISAV-B was approved by the FDA on November 9, 2017, at which time we began to capitalize inventory costs associated 

with the vial presentation of HEPLISAV-B. In March 2018, we received regulatory approval of the pre-filled syringe (“PFS”) 
presentation of HEPLISAV-B. Prior to FDA approval of HEPLISAV-B, all costs related to the manufacturing of HEPLISAV-B that 
could potentially be available to support the commercial launch, were charged to research and development expense in the period 
incurred as there was no alternative future use. Prior to regulatory approval of PFS, costs associated with resuming operating activities 
at the Düsseldorf manufacturing facility were also included in research and development expense. Subsequent to regulatory approval 
of PFS, costs associated with resuming manufacturing activities at the Düsseldorf facility were included in cost of sales – product, 
until commercial production resumed in mid-2018 at which time these costs were recorded as raw materials inventory. 

Intangible Assets 

We record definite-lived intangible assets related to certain capitalized milestone and sublicense payments. After determining 

that the pattern of future cash flows associated with intangible asset could not be reliably estimated with a high level of precision, 
these assets are amortized on a straight-line basis over their remaining useful lives, which are estimated to be the remaining patent life. 
We assess our intangible assets for impairment if indicators are present or changes in circumstance suggest that impairment may exist. 
No impairment has been identified during the years presented.  

Long-Lived Assets  

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful 

lives of the respective assets. Additions, major renewals and improvements are capitalized and repair and maintenance costs are 
charged to expense as incurred. Leasehold improvements are amortized over the remaining life of the initial lease term or the 
estimated useful lives of the assets, whichever is shorter.  

We evaluate the carrying value of long-lived assets, whenever events or changes in business circumstances or our planned use 

of long-lived assets indicate, based on undiscounted future operating cash flows, that their carrying amounts may not be fully 

66 
 
recoverable or that their useful lives are no longer appropriate. When an indicator of impairment exists, undiscounted future operating 
cash flows of long-lived assets are compared to their respective carrying value. If the carrying value is greater than the undiscounted 
future operating cash flows of long-lived assets, the long-lived assets are written down to their respective fair values and an 
impairment loss is recorded. Fair value is determined primarily using the discounted cash flows expected to be generated from the use 
of assets. Significant management judgment is required in the forecast of future operating results that are used in the preparation of 
expected cash flows. In the third quarter of 2019, we recorded accelerated depreciation of $3.0 million related to certain long-lived 
assets. See Note 17.  

Leases 

We determine if an arrangement includes a lease at inception. Operating leases are included in operating lease right-of-use 

assets, other current liabilities and long-term portion of lease liabilities in our consolidated balance sheets. Right-of-use assets 
represent our right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease 
payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date 
based on the present value of lease payments over the lease term. In determining the net present value of lease payments, we use our 
incremental borrowing rate which represents an estimated rate of interest that we would have to pay to borrow equivalent funds on a 
collateralized basis at the lease commencement date. 

The operating lease right-of-use assets also include any lease payments made and exclude any lease incentives. Our leases may 
include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that we will exercise 
any such options. Lease expense is recognized on a straight-line basis over the expected lease term. We have elected not to apply the 
recognition requirements of ASC 842 for short-term leases. We have also elected the practical expedient to not separate lease 
components from non-lease components. 

As lessors, we determine if an arrangement includes a lease at inception. We elected the practical expedient to not separate lease 

components from non-lease components. Sublease income is recognized on a straight-line basis over the expected lease term and is 
included in other income (expense) in our consolidated statements of operations. 

Goodwill 

Our goodwill balance relates to our April 2006 acquisition of Dynavax GmbH. Goodwill represents the excess purchase price 

over the fair value of tangible and intangible assets acquired and liabilities assumed. Goodwill is not amortized but is subject to an 
annual impairment test. In performing its goodwill impairment review, we assess qualitative factors to determine whether it is more 
likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The qualitative factors 
include, but are not limited to macroeconomic conditions, industry and market considerations, and the overall financial performance of 
the Company. If after assessing the totality of these qualitative factors, we determine that it is not more likely than not that the fair 
value of its reporting unit is less than its carrying amount, then no additional assessment is deemed necessary. Otherwise, we will 
proceed to perform a test for goodwill impairment. The first step involves comparing the estimated fair value of the related reporting 
unit against its carrying amount including goodwill. If the carrying amount exceeds the fair value, the amount by which the carrying 
amount exceeds the reporting unit’s fair value is recorded as a charge in the consolidated statements of operations. We determined that 
we have only one operating segment and there are no components of that operating segment that are deemed to be separate reporting 
units such that we have one reporting unit for purposes of our goodwill impairment testing. We evaluate goodwill for impairment on 
an annual basis and on an interim basis if events or changes in circumstances between annual impairment tests indicate that the asset 
might be impaired. No impairment has been identified for the years presented. 

67 
 
Revenue Recognition  

We recognize revenue when the customer obtains control of promised goods or services, in an amount that reflects the 

consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements 
that we determine are within the scope of Accounting Standards Codification (“ASC”) 606, we perform the following five steps: (i) 
identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; 
(iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a 
performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we 
are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined 
to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are 
performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of 
the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. 

Product Revenue, Net – HEPLISAV-B 

We sell HEPLISAV-B to a limited number of wholesalers and specialty distributors in the U.S. (collectively, our “Customers”). 
Revenues from product sales are recognized when we have satisfied our performance obligation, which is the transfer of control of our 
product upon delivery to the Customer. The timing between the recognition of revenue for product sales and the receipt of payment is 
not significant. Because our standard credit terms are short-term and we expect to receive payment in less than one-year, there is no 
significant financing component on the related receivables. Taxes collected from Customers relating to product sales and remitted to 
governmental authorities are excluded from revenues. 

Overall, product revenue, net, reflects our best estimates of the amount of consideration to which we are entitled based on the 

terms of the contract. The amount of variable consideration is included in the net sales price only to the extent that it is probable that a 
significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If our estimates differ 
significantly from actuals, we will record adjustments that would affect product revenue, net in the period of adjustment. 

Reserves for Variable Consideration 

Revenues from product sales are recorded at the net sales price, which includes estimates of variable consideration such as 

product returns, chargebacks, discounts, rebates and other fees that are offered within contracts between us and our Customers, 
healthcare providers, pharmacies and others relating to our product sales. We estimate variable consideration using either the most 
likely amount method or the expected value method, depending on the type of variable consideration and what method better predicts 
the amount of consideration we expect to receive. We take into consideration relevant factors such as industry data, current contractual 
terms, available information about Customers’ inventory, resale and chargeback data and forecasted customer buying and payment 
patterns, in estimating each variable consideration. The variable consideration is recorded at the time product sales is recognized, 
resulting in a reduction in product revenue and a reduction in accounts receivable (if the Customer offsets the amount against its 
accounts receivable) or as an accrued liability (if we pay the amount through our accounts payable process). Variable consideration 
requires significant estimates, judgment and information obtained from external sources. The amount of variable consideration is 
included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue 
recognized will not occur in a future period. If our estimates differ significantly from actuals, we will record adjustments that would 
affect product revenue, net in the period of adjustment. If we were to change any of these judgments or estimates, it could cause a 
material increase or decrease in the amount of revenue that we report in a particular period. We evaluate our estimates of variable 
considerations including, but not limited to, product returns, chargebacks and rebates, periodically or when there is an event or change 
in circumstances that may indicate that our estimates may change. During the fourth quarter of 2020, based on an analysis of historical 
product returns and customer ordering patterns, we decreased our returns reserve resulting in an increase in HEPLISAV-B product 
revenue, net of approximately $0.8 million. There were no material adjustments to these estimates for the years ended December 31, 
2019 and 2018. 

Product Returns: Consistent with industry practice, we offer our Customers a limited right of return based on the product’s 
expiration date for product that has been purchased from us. We estimate the amount of our product sales that may be returned by our 
Customers and record this estimate as a reduction of revenue in the period the related product revenue is recognized. We consider 
several factors in the estimation of potential product returns including expiration dates of the product shipped, the limited product 
return rights, available information about Customers’ inventory, shelf life of the product and other relevant factors.  

68 
 
Chargebacks: Our Customers subsequently resell our product to healthcare providers, pharmacies and others. In addition to 

distribution agreements with Customers, we enter into arrangements with qualified healthcare providers that provide for chargebacks 
and discounts with respect to the purchase of our product. Chargebacks represent the estimated obligations resulting from contractual 
commitments to sell product to qualified healthcare providers at prices lower than the list prices charged to Customers who directly 
purchase the product from us. Customers charge us for the difference between what they pay for the product and the ultimate selling 
price to the qualified healthcare providers. These reserves are established in the same period that the related revenue is recognized, 
resulting in a reduction of product revenue and accounts receivable. Chargeback amounts are determined at the time of resale to the 
qualified healthcare providers by Customers, and we issue credits for such amounts generally within a few weeks of the Customer’s 
notification to us of the resale. Reserves for chargebacks consists of credits that we expect to issue for units that remain in the 
distribution channel inventories at each reporting period end that we expect will be sold to the qualified healthcare providers, and 
chargebacks for units that our Customers have sold to the qualified healthcare providers, but for which credits have not been issued. 

Trade Discounts and Allowances: We provide our Customers with discounts which include early payment incentives that are 
explicitly stated in our contracts, and are recorded as a reduction of revenue in the period the related product revenue is recognized.  

Distribution Fees: Distribution fees include fees paid to certain Customers for sales order management, data and distribution 

services. Distribution fees are recorded as a reduction of revenue in the period the related product revenue is recognized. 

Rebates: Under certain contracts, customers may obtain rebates for purchasing minimum volumes of our product. We estimate 
these rebates based upon the expected purchases and the contractual rebate rate and record this estimate as a reduction in revenue in 
the period the related revenue is recognized. 

Product Revenue, Net – CpG 1018 

We also sell our novel adjuvant, CpG 1018, to our collaboration partners for use in their development and/or commercialization 

of COVID-19 vaccine. We have determined that our collaboration partners meet the definition of customers under ASC 606. 
Therefore, we accounted for our CpG 1018 sales under ASC 606. Revenues from product sales are recognized when we have satisfied 
our performance obligation, which is the transfer of control of our product to the customer. Because the timing between the 
recognition of revenue for product sales and the receipt of payment is less than one year, there is no significant financing component 
on the related receivables.  

Overall, product revenue, net, reflects our best estimates of the amount of consideration to which we are entitled based on the 

terms of the contract. The amount of consideration is included in the net sales price only to the extent that it is probable that a 
significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If our estimates differ 
significantly from actuals, we will record adjustments that would affect product revenue, net in the period of adjustment.   

Collaboration and Manufacturing Service Revenue 

We have entered into collaborative arrangements and arrangements to provide manufacturing services to other companies. Such 

arrangements may include promises to customers which, if capable of being distinct, are accounted for as separate performance 
obligations. For agreements with multiple performance obligations, we allocate estimated revenue to each performance obligation at 
contract inception based on the estimated transaction price of each performance obligation. Revenue allocated to each performance 
obligation is then recognized when we satisfy the performance obligation by transferring control of the promised good or service to 
the customer. Collaboration and manufacturing service revenue is included in other revenue in our consolidated statements of 
operations. 

Research and Development Expenses and Accruals  

Research and development expenses include personnel and facility-related expenses, outside contracted services including 

clinical trial costs, manufacturing and process development costs, research costs and other consulting services and non-cash stock-
based compensation. Research and development costs are expensed as incurred. Amounts due under contracts with third parties may 
be either fixed fee or fee for service, and may include upfront payments, monthly payments and payments upon the completion of 
milestones or receipt of deliverables. Non-refundable advance payments under agreements are capitalized and expensed as the related 
goods are delivered or services are performed. 

69 
 
We contract with third parties to perform various clinical trial activities in the on-going development of potential products. The 
financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows 
to our vendors. Payments under the contracts depend on factors such as the achievement of certain events, successful enrollment of 
patients, and completion of portions of the clinical trial or similar conditions. Our accrual for clinical trials is based on estimates of the 
services received and efforts expended pursuant to contracts with clinical trial centers and clinical research organizations. We may 
terminate these contracts upon written notice and we are generally only liable for actual effort expended by the organizations to the 
date of termination, although in certain instances we may be further responsible for termination fees and penalties. We estimate 
research and development expenses and the related accrual as of each balance sheet date based on the facts and circumstances known 
to us at that time. There have been no material adjustments to the prior period accrued estimates for clinical trial activities during the 
years presented.  

Stock-Based Compensation  

Stock-based compensation expense for restricted stock units and stock options is estimated at the grant date based on the 
award’s estimated fair value and is recognized on a straight-line basis over the award’s requisite service period, assuming estimated 
forfeiture rates. Fair value of restricted stock units is determined at the date of grant using the Company’s closing stock price. Our 
determination of the fair value of stock options on the date of grant using an option-pricing model is affected by our stock price, as 
well as assumptions regarding a number of subjective variables. We selected the Black-Scholes option pricing model as the most 
appropriate method for determining the estimated fair value-based measurement of our stock options. The Black-Scholes model 
requires the use of subjective assumptions which determine the fair value-based measurement of stock options. These assumptions 
include, but are not limited to, our expected stock price volatility over the term of the awards, and projected employee stock option 
exercise behaviors. In the future, as additional empirical evidence regarding these input estimates becomes available, we may change 
or refine our approach of deriving these input estimates. These changes could impact our fair value of stock options granted in the 
future. Changes in the fair value of stock awards could materially impact our operating results.  

Our current estimate of volatility is based on the historical volatility of our stock price. To the extent volatility in our stock price 

increases in the future, our estimates of the fair value of options granted in the future could increase, thereby increasing stock-based 
compensation cost recognized in future periods. We derive the expected term assumption primarily based on our historical settlement 
experience, while giving consideration to options that have not yet completed a full life cycle. Stock-based compensation cost is 
recognized only for awards ultimately expected to vest. Our estimate of the forfeiture rate is based primarily on our historical 
experience. To the extent we revise this estimate in the future, our share-based compensation cost could be materially impacted in the 
period of revision. There have been no material adjustments to these estimates during the years presented. 

Income Taxes 

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences 

of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are 
reflected in income in the period such changes are enacted. We include interest and penalties related to income taxes, including 
unrecognized tax benefits, within income tax expense. 

Our income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue 
Service and other tax authorities. In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application 
of complex tax regulations. We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to 
evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that 
the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to 
measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While we believe we 
have appropriate support for the positions taken on our tax returns, we regularly assess the potential outcomes of examinations by tax 
authorities in determining the adequacy of our provision for income taxes. We continually assess the likelihood and amount of 
potential adjustments and adjust the income tax provision, income taxes payable and deferred taxes in the period in which the facts 
that give rise to a revision become known. 

Significant judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and the 
valuation allowance recorded against our net deferred tax assets. Deferred tax assets and liabilities are determined using the enacted 
tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is 
more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for 
a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and negative 
evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax 
book income after permanent differences, earnings history, and reliability of forecasting. 

70 
 
Based on our review, we concluded that it was more likely than not that we would not be able to realize the benefit of our 
domestic and foreign deferred tax assets in the future. This conclusion was based on historical and projected operating performance, as 
well as our expectation that our operations will not generate sufficient taxable income in future periods to realize the tax benefits 
associated with the deferred tax assets within the statutory carryover periods. Therefore, we have maintained a full valuation 
allowance on our deferred tax assets as of December 31, 2020 and 2019. We will continue to assess the need for a valuation allowance 
on our deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax 
asset valuation allowance would be recorded in the statement of operations for the period that the adjustment is determined to be 
required. 

Restructuring 

Restructuring costs are comprised of severance, other termination benefit costs, stock-based compensation expense for stock 

award and stock option modifications related to workforce reductions and accelerated depreciation. We recognize restructuring 
charges when the liability is probable and the amount is estimable. Employee termination benefits are accrued at the date management 
has committed to a plan of termination and affected employees have been notified of their termination date and expected severance 
benefits. 

Recent Accounting Pronouncements  

Accounting Standards Update 2016-13 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, 
Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. The standard changes the 
methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. For public business 
entities, excluding smaller reporting companies, this ASU is effective for fiscal years beginning after December 15, 2019. Furthermore, 
the one-time determination of whether an entity is eligible to be a smaller reporting company shall be based on an entity’s most recent 
determination as of November 15, 2019, in accordance with SEC regulations. Because we were a smaller reporting company based on 
the most recent determination as of November 15, 2019, this ASU and its subsequent updates, will be effective for fiscal years 
beginning after December 15, 2022. We are currently evaluating the impact this standard will have on our consolidated financial 
statements. 

Accounting Standards Update 2019-12 

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU 

simplifies the accounting for income taxes by removing certain exceptions and improving consistent application in certain areas of 
Topic 740. The ASU is effective for annual periods beginning after December 15, 2020 with early adoption permitted. We adopted 
this ASU on January 1, 2021 and the adoption of this standard did not have a material impact on our consolidated financial statements. 

Accounting Standards Update 2020-06 

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and 

Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and 
Contracts in an Entity’s Own Equity. This ASU simplifies the accounting for convertible instruments. This ASU also requires entities 
to use the if-converted method for all convertible instruments in calculating diluted earnings-per-share. The ASU is effective for 
annual periods beginning after December 15, 2021 with early adoption permitted. We are currently evaluating the impact this standard 
will have on our condensed consolidated financial statements. 

3. 

Fair Value Measurements  

We measure fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in 

the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the 
measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use 
of unobservable inputs. The accounting standard describes a fair value hierarchy based on three levels of inputs, of which the first two 
are considered observable and the last unobservable, that may be used to measure fair value which are the following:  

  Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities;  

  Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets 
or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by 
observable market data for substantially the full term of the assets or liabilities; and  

71 
 
 
  Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of 

the assets or liabilities; therefore, requiring an entity to develop its own valuation techniques and assumptions.  

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. We 

review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a 
reclassification of levels for certain assets or liabilities within the fair value hierarchy. There were no transfers between Level 1, 2 and 
3 during the years ended December 31, 2020 and 2019. 

The carrying amounts of cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are 

considered reasonable estimates of their respective fair value because of their short-term nature. 

Recurring Fair Value Measurements  

The following table represents the fair value hierarchy for our financial assets (cash equivalents and marketable securities) and 

liabilities measured at fair value on a recurring basis (in thousands):  

December 31, 2020 
 Assets 

Money market funds 
U.S. treasuries 
U.S. government agency securities 
Corporate debt securities 

Total assets 
Liabilities 

Warrant liability 

December 31, 2019 
 Assets 

Money market funds 
U.S. treasuries 
U.S. government agency securities 
Corporate debt securities 

Total assets 
Liabilities 

Warrant liability 
 Sublicense liability 

Total liabilities 

Level 1 

   Level 2 

   Level 3 

Total 

23,128   
-   
-   
-   
23,128   

 $ 

 $ 

-   
32,579   
40,321   
61,063   
133,963   

 $ 

 $ 

-   
-   
-   
-   
-   

 $ 

 $ 

23,128   
32,579   
40,321   
61,063   
157,091   

-   

 $ 

-   

 $ 

10,736   

 $ 

10,736   

Level 1 

   Level 2 

   Level 3 

Total 

27,854   
-   
-   
-   
27,854   

-   
-   
-   

 $ 

 $ 

 $ 

 $ 

-   
6,517   
51,273   
61,373   
119,163   

-   
-   
-   

 $ 

 $ 

 $ 

 $ 

-   
-   
-   
-   
-   

14,860   
6,948   
21,808   

 $ 

 $ 

 $ 

 $ 

27,854   
6,517   
51,273   
61,373   
147,017   

14,860   
6,948   
21,808   

$ 

$ 

$ 

$ 

$ 

$ 

$ 

Money market funds are highly liquid investments and are actively traded. The pricing information on these investment 

instruments is readily available and can be independently validated as of the measurement date. This approach results in the 
classification of these securities as Level 1 of the fair value hierarchy. 

U.S. treasuries, U.S. government agency securities and corporate debt securities are measured at fair value using Level 2 inputs. 

We review trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for 
identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from 
various third-party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been 
derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value 
hierarchy. 

Warrants were issued in connection with the underwritten public offering in August 2019 and are accounted for as a derivative 
liability at fair value. See Note 14. The fair value of the warrant liability is estimated using the Black-Scholes model which requires 
assumptions such as expected term, expected volatility and risk-free interest rate. These assumptions are subjective and require 
judgement to develop. Expected term is estimated using the full remaining contractual term of the warrants. We determine expected 
volatility based on our historical common stock price volatility. The warrant liability is classified as a Level 3 instrument as its value 
is based on unobservable inputs that are supported by little or no market activity. 

As of December 31, 2020, we used the following key assumptions to estimate the fair value of warrant liability: 

72 
 
 
  
  
  
  
  
  
    
    
    
    
    
    
    
  
    
    
    
    
    
    
    
  
  
   
   
   
  
   
   
   
  
   
   
   
    
  
     
  
     
  
     
  
  
  
   
   
   
   
   
   
   
  
  
  
  
  
  
    
    
    
    
    
    
    
  
    
    
    
    
    
    
    
  
  
   
   
   
  
   
   
   
  
   
   
   
    
  
     
  
     
  
     
  
  
   
   
   
 
 
Number of shares 
Expected term 
Expected volatility 
Risk-free interest rate 
Dividend yield 

5,841,250   
1.1 years   
1.0   
0.1 % 
0 % 

The following table provides a summary of changes in the fair value warrant liability for year ended December 31, 2020 and 

2019 (in thousands): 

Balance at December 31, 2018 

Fair value of warrant liability at issuance date 
Increase in estimated fair value of warrant liability upon revaluation 

Balance at December 31, 2019 

Decrease in estimated fair value of warrant liability upon revaluation 

Balance at December 31, 2020 

   $ 

   $ 

   $ 

-   
7,360   
7,500   
14,860   
(4,124 ) 
10,736   

4. 

Cash, Cash Equivalents, Restricted Cash and Marketable Securities  

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated 

balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows: 

Cash and cash equivalents 
Restricted cash 
Total cash, cash equivalents and restricted cash shown in the 
   consolidated statements of cash flows 

2020 

December 31 
2019 

2018 

   $ 

32,073      $ 
237        

39,884      $ 
216        

49,348   
619   

   $ 

32,310      $ 

40,100      $ 

49,967   

Restricted cash balances relate to certificates of deposit issued as collateral to certain letters of credit issued as security to our 

lease arrangements. See Note 9. 

73 
 
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
 
 
 
 
  
  
  
  
  
    
    
  
     
Cash, cash equivalents and marketable securities consist of the following (in thousands):  

Amortized 
Cost 

Unrealized 
Gains 

Unrealized 
Losses 

Estimated 
Fair Value    

December 31, 2020 
Cash and cash equivalents: 

Cash 
Money market funds 
Corporate debt securities 
Total cash and cash equivalents 
Marketable securities available-for-sale: 

U.S. treasuries 
U.S. government agency securities 
Corporate debt securities 

Total marketable securities available-for-sale 
Total cash, cash equivalents and marketable securities 
December 31, 2019 
Cash and cash equivalents: 

Cash 
Money market funds 
Corporate debt securities 
Total cash and cash equivalents 
Marketable securities available-for-sale: 

U.S. treasuries 
U.S. government agency securities 
Corporate debt securities 

   $ 

   $ 

   $ 

Total marketable securities available-for-sale 
Total cash, cash equivalents and marketable securities 

   $ 

7,945      $ 
23,128        
1,000        
32,073        

32,548        
40,313        
60,071        
132,932        
165,005      $ 

4,038      $ 
27,854        
7,992        
39,884        

6,511        
51,235        
53,353        
111,099        
150,983      $ 

-      $ 
-        
-        
-        

31        
14        
3        
48        
48      $ 

-      $ 
-        
-        
-        

6        
50        
28        
84        
84      $ 

-      $ 
-        
-        
-        

-        
(6 )      
(11 )      
(17 )      
(17 )    $ 

-      $ 
-        
-        
-        

-        
(12 )      
-        
(12 )      
(12 )    $ 

7,945   
23,128   
1,000   
32,073   

32,579   
40,321   
60,063   
132,963   
165,036   

4,038   
27,854   
7,992   
39,884   

6,517   
51,273   
53,381   
111,171   
151,055   

The maturities of our marketable securities available-for-sale are as follows (in thousands): 

. 

Mature in one year or less 
Mature after one year through two years 

December 31, 2020 

Amortized 
Cost 

Estimated 
Fair Value 

 $ 

 $ 

122,156   
10,776   
132,932   

 $ 

 $ 

122,181   
10,782   
132,963   

For the year ended December 31, 2020, there were gross realized gains on investments of $0.1 million and no gross realized 

losses. There were no gross realized gains or losses on investments for each of the year ended December 31, 2019 and 2018. Realized 
gains are included in interest income in the consolidated statements of operations. All investments with unrealized losses at December 
31, 2020 have been in a loss position for less than twelve months. We do not intend to sell the investments that are in an unrealized 
loss position before recovery of their amortized cost basis. To date, there have been no declines in fair value that have been identified 
as other than temporary. 

5. 

Inventories, net 

The following table presents inventories, net (in thousands):  

Raw materials 
Work-in-process 
Finished goods 
Total 

December 31 

2020 

2019 

   $ 

   $ 

25,121      $ 
30,293        
8,275        
63,689      $ 

15,198   
22,890   
3,244   
41,332   

74 
 
 
  
  
     
     
     
       
         
         
         
  
       
         
         
         
  
     
     
     
       
         
         
         
  
     
     
     
     
       
         
         
         
  
       
         
         
         
  
     
     
     
       
         
         
         
  
     
     
     
     
 
 
 
  
  
 
  
 
  
   
   
  
 
 
 
 
  
  
  
  
  
    
  
     
     
 
As of December 31, 2020, prepaid manufacturing on the consolidated balance sheets represents prepayments totaling $29.4 

million made to a third-party manufacturer to produce CpG 1018 to fulfil our collaborators’ orders which we expect to be utilized in 
the manufacturing process and/or sold within the next twelve months. See Note 10. 

6. 

Intangible Assets, net 

Intangible assets are related to certain capitalized milestone and sublicense payments. The following table presents intangible 

assets (in thousands): 

Intangible assets 
Less accumulated amortization 
Total 

December 31, 

2020 

2019 

   $ 

   $ 

19,773      $ 
(19,773 )      
-      $ 

19,773   
(17,273 ) 
2,500   

We recorded cost of sales - amortization of intangible assets related to capitalized sublicense payments to Merck, Sharp & 

Dohme Corp. (“Merck”) that we capitalized upon FDA approval of HEPLISAV-B in November 2017. See Note 10. Cost of sales – 
amortization of intangible assets for the year ended 2020 and 2019 was $2.5 million and $9.2 million, respectively. At December 31, 
2020, intangible assets related to Merck has been fully amortized. No impairment of intangible assets has been identified during the 
years presented. 

Sale of SD-101 Program 

In May 2019, we announced a strategic restructuring to focus on our vaccine business and curtail our investment in our 

immuno-oncology programs. In July 2020, we sold assets related to our immuno-oncology compound, SD-101, which included 
intellectual property, clinical and non-clinical data, regulatory filings, clinical supply inventory and certain contracts to Surefire 
Medical Inc. d/b/a TriSalus Life Sciences (“TriSalus”). Pursuant to the Asset Purchase Agreement, we received $5 million upon 
closing of the transaction and $4 million in December 2020 as reimbursement for certain clinical trial expenses. In addition, we could 
receive up to an additional $250 million upon the achievement of certain development, regulatory, and commercial milestones and low 
double-digit royalties based on potential future net sales of product containing SD-101 compound. In connection with our agreement 
with Symphony Dynamo, Inc. and Symphony Dynamo Holdings LLC (“Holdings”) in November 2009, we paid $2.5 million to 
Holdings in August 2020. See Note 9.  

For the year ended December 31, 2020, we recognized a gain on sale of SD-101 assets of $6.9 million, based on the amount of 

consideration received, net of any transaction costs. The $2.5 million payment to Holdings was included in selling, general and 
administrative expense in our consolidated statement of operations. 

7. 

Property and Equipment, net  
Property and equipment consist of the following (in thousands): 

Manufacturing equipment 
Lab equipment 
Computer equipment 
Furniture and fixtures 
Leasehold improvements 
Assets in progress 

Less accumulated depreciation and amortization 
Total 

Estimated Useful 
Life 
(In years) 
5-14 
5-13 
3 
3-13 
2-12 

December 31, 

2020 

2019 

13,884      $ 
2,888     
5,255     
2,510     
28,417     
1,024     
53,978     
(23,411 )   
30,567      $ 

11,484   
2,522   
5,009   
1,934   
24,724   
4,336   
50,009   
(17,987 ) 
32,022   

   $ 

   $ 

Depreciation and amortization expense on property and equipment was $4.3 million, $8.9 million and $3.6 million for the years 

ended December 31, 2020, 2019 and 2018, respectively. Included in depreciation and amortization expense for the year ended 
December 31, 2019 was accelerated depreciation of $3.0 million related to certain long-lived assets. See Note 17. 

75 
 
 
 
  
  
  
  
  
     
  
     
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
8. 

Current Accrued Liabilities and Accrued Research and Development 

Current accrued liabilities and accrued research and development consist of the following (in thousands):  

Payroll and related expenses 
Revenue reserve accruals 
Third party research expenses 
Third party development expenses 
Restructuring liability 
Other accrued liabilities 
Total 

9. 

Commitments and Contingencies  

Leases 

December 31, 

2020 

2019 

$ 

$ 

8,684   
6,040   
1,963   
842   
-   
4,375   
21,904   

 $ 

 $ 

6,653   
3,893   
2,308   
505   
675   
4,888   
18,922   

We lease our facilities in Emeryville, California and Düsseldorf, Germany. 

In July 2019, we entered into a sublease for office space located at 2100 Powell Street, Emeryville, California (the “Powell 
Street Sublease”) and the lease for our former corporate headquarters at 2929 Seventh Street, Berkeley, California was terminated 
effective August 31, 2019. Under the terms of the Powell Street Sublease, we are leasing 23,976 square feet at the rate of $3.90 per 
square foot, paid on a monthly basis. Rent is subject to scheduled annual increases and we are responsible for certain operating 
expenses and taxes throughout the life of the Powell Street Sublease. The Powell Street Sublease will continue until June 30, 2022. 
There is no option to extend the sublease term. 

On September 17, 2018, we entered into a lease (“Horton Street Master Lease”) for office and laboratory space located at 5959 
Horton Street, Emeryville, California (“Horton Street Premises”). Under the terms of the Horton Street Master Lease, we are leasing 
75,662 square feet at the rate of $4.75 per square foot, paid on a monthly basis, starting on April 1, 2019 (“Commencement Date”). 
Rent is subject to scheduled annual increases, and we are also responsible for certain operating expenses and taxes throughout the life 
of Horton Street Master Lease. In connection with the Horton Street Master Lease, we are entitled to a tenant improvement allowance 
of up to $8.3 million, of which $8.1 million was received through December 31, 2020. The Horton Street Master Lease has an initial 
term of 12 years, following the Commencement Date with an option to extend the lease for two successive five-year terms. The 
optional periods were not included in the lease term used in determining the right-of-use asset or the lease liability as we did not 
consider it reasonably certain that we would exercise the options. The operating lease right-of-use assets and liabilities on our 
December 31, 2020 and 2019 consolidated balance sheets primarily relate to the Horton Street Master Lease. 

In connection with the organizational restructuring in May 2019 (see Note 17), we did not occupy the Horton Street Premises 

and in July 2019, we entered into an agreement to sublease the Horton Street Premises to a third party (“Horton Street Sublease”). 
Under the terms of the Horton Street Sublease, we are subleasing the entire 75,662 rentable square feet at the rate of $5.50 per square 
foot, paid on a monthly basis. Rent is subject to scheduled annual increases and the subtenant (“Subtenant”) is responsible for certain 
operating expenses and taxes throughout the life of the Horton Street Sublease. The Horton Street Sublease will continue until March 
31, 2031, unless earlier terminated, concurrent with the term of our Horton Street Master Lease. The Subtenant has no option to 
extend the sublease term. For the years ended December 31, 2020 and 2019, we recognized $7.7 million and $2.6 million, respectively 
of sublease income included in other income (expense) in our consolidated statements of operations.  

Under the terms of the Horton Street Master Lease, rent received from the Subtenant in excess of rent paid to the landlord is 

shared by paying the landlord 50% of the excess rent. 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. 

Our lease expense comprises of the following (in thousands): 

Operating lease expense 

   $ 

6,267      $ 

6,886      $ 

3,953   

2020 

Year Ended December 31, 
2019 

2018 

Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2020 and 2019 was 
$6.9 million and $5.5 million, respectively and were included in change in lease liabilities in our consolidated statement of cash flows.  

76 
 
 
  
  
  
  
  
  
  
  
   
  
   
  
   
  
   
  
   
 
 
 
  
  
  
  
  
     
     
  
 
The balance sheet classification of our operating lease liabilities was as follows (in thousands): 

Operating lease liabilities: 

Current portion of lease liabilities (included in other current liabilities) 
Long-term portion of lease liabilities 

Total operating lease liabilities 

   December 31, 2020 

      December 31, 2019 

   $ 

   $ 

3,247      $ 
34,789        
38,036      $ 

3,039   
37,845   
40,884   

At December 31, 2020, the maturities of our sublease income and operating lease liabilities were as follows (in thousands): 

Years ending December 31, 

2021 
2022 
2023 
2024 
2025 
Thereafter 
Total 

Less: 

Present value adjustment 

Total 

   $ 

   $ 

Sublease Income 

Operating Lease 
Liabilities 

5,201      $ 
5,357        
5,518        
5,684        
5,854        
33,742        
61,356        

      $ 

6,942   
6,268   
5,403   
5,547   
5,696   
30,760   
60,616   

(22,580 ) 
38,036   

The weighted average remaining lease term and the weighted average discount rate used to determine the operating lease 

liability were as follows:  

Weighted average remaining lease term 
Weighted average discount rate 

Commitments 

   December 31, 2020 

   December 31, 2019 

9.1 years      

10.1 %      

9.7 years   

10.1 % 

On February 20, 2018, we entered into a $175.0 million term loan agreement (“Loan Agreement”) with CRG Servicing LLC. 

We borrowed $100.0 million under the Loan Agreement at closing and the remaining $75.0 million in March 2019 (collectively, 
“Term Loans”). At our option, until September 30, 2023, a portion of the interest payments may be paid in kind, and thereby added to 
the principal. Through December 31, 2020, a portion of our interest was paid in kind, which increased the principal amount of the 
Term Loans. Included in our total contractual obligations of $188.1 million is the principal amount of $175.0 million, paid-in-kind 
interest of $5.9 million and the backend facility fee of $7.2 million. The Term Loans have a maturity date of December 31, 2023, 
unless earlier prepaid. See Note 11. 

As of December 31, 2020, our material non-cancelable purchase and other commitments, for the supply of HEPLISAV-B, CpG 

1018 and for clinical research totaled $21.7 million.  

During 2004, we also established a letter of credit with Deutsche Bank as security for our Düsseldorf Lease in the amount of 
€0.2 million (Euros). The letter of credit remained outstanding through December 31, 2020 and is collateralized by a certificate of 
deposit for €0.2 million, which has been included in restricted cash in the consolidated balance sheets as of December 31, 2020 and 
2019. 

In addition to the non-cancelable commitments included above, we have entered into contractual arrangements that obligate us 

to make payments to the contractual counterparties upon the occurrence of future events. In addition, in the normal course of 
operations, we have entered into license and other agreements and intend to continue to seek additional rights relating to compounds 
or technologies in connection with our discovery, manufacturing and development programs. Under the terms of the agreements, we 
may be required to pay future up-front fees, milestones and royalties on net sales of products originating from the licensed 
technologies, if any, or other payments contingent upon the occurrence of future events that cannot reasonably be estimated. 

We also rely on and have entered into agreements with research institutions, contract research organizations and clinical 
investigators as well as clinical material manufacturers. These agreements are terminable by us upon written notice. Generally, we are 

77 
 
 
  
  
       
         
  
     
 
 
  
  
  
  
     
     
     
     
     
     
        
   
     
        
     
 
  
  
  
  
  
     
liable only for actual effort expended by the organizations at any point in time during the contract through the notice period. As of 
December 31, 2020, our non-cancelable obligation for services and materials provided by these organizations totaled $0.3 million. 

We provided $0.1 million of guarantee as of December 31, 2020 in the form of a surety bond issued to support a certain license 
which requires a surety bond to ensure our compliance with a certain state’s requirements. We would only be liable for any penalty of 
up to the guaranteed amount in the event of a non-compliance, of which the probability is remote. 

In conjunction with our agreement with 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 SD-101. In July 2020, we sold assets related to our SD-101 compound to 
TriSalus. See Note 6. We paid $2.5 million to Holdings in August 2020. We are obligated to pay Holdings 50% of the contingent pre-
commercialization milestone payments that we may receive under the Asset Purchase Agreement. No liability has been recorded 
under this agreement as of December 31, 2020. 

Contingencies 

From time to time, we may be involved in claims, suits, and proceedings arising from the ordinary course of our business, 

including actions with respect to intellectual property claims, commercial claims, and other matters. Such claims, suits, and 
proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the outcome, such legal 
proceedings can have an adverse impact on us because of legal costs, diversion of management resources, and other factors. In 
addition, it is possible that a resolution of one or more such proceedings could result in substantial damages, fines, penalties or orders 
requiring a change in our business practices, which could in the future materially and adversely affect our financial position, financial 
statements, results of operations, or cash flows in a particular period. 

78 
 
 
10.  Collaborative Research, Development and License Agreements  

Coalition for Epidemic Preparedness Innovations  

In September 2020, we entered into a Reservation Agreement for the Provision of Goods (the “Reservation Agreement”) with 

Coalition for Epidemic Preparedness Innovations (“CEPI”) to make available specified quantities of CpG 1018 adjuvant, for 
purchases at certain prices, to CEPI and its COVID-19 vaccine development partners (“CEPI Partners”). Payments received under the 
Reservation Agreement are considered an exchange for our CpG 1018 adjuvant which is an output of our ordinary activities. As such, 
we account for the arrangement under the scope of ASC 606. Payments are recorded as deferred revenue and recognized as revenue in 
the period when we satisfy our performance obligation to deliver CpG 1018 ordered or when CEPI’s right to place an order expires. 
Pursuant to the Reservation Agreement, we received $6.3 million from CEPI in September 2020 for production scale-up and a fourth 
quarter 2020 reservation fee.  

In October 2020, CEPI terminated the Reservation Agreement and its right to place an order expired. Therefore, we recognized 

$6.3 million as other revenue in the fourth quarter of 2020. 

Valneva SE  

In April 2020, we entered into a Collaboration Agreement, as amended, with Valneva Scotland Limited (“Valneva”) to provide 

CpG 1018 adjuvant for use in the development of Valneva’s COVID-19 vaccine candidate. Then, in July 2020, we entered into a 
Clinical Collaboration Agreement, as amended, to provide additional quantities of CpG 1018 adjuvant. In September 2020, we entered 
into a Supply Agreement (“Supply Agreement”) with Valneva to manufacture and supply specified quantities of CpG 1018 adjuvant 
for use in the commercialization of Valneva's COVID-19 vaccine candidate.  

We concluded that the Collaboration Agreement and the Supply Agreement were entered into at or near the same time, with the 

same customer and were negotiated as a package with a single commercial objective, that is the provision of CpG 1018 adjuvant to 
Valneva. Therefore, the Collaboration Agreement and the Supply Agreement should be combined and accounted for as a single 
arrangement. 

Pursuant to our supply agreement with Valneva, in the fourth quarter of 2020, we received payments from Valneva totaling 
$20.0 million and issued an invoice to Valneva for $17.1 million for advanced payment to purchase specified quantities of CpG 1018 
adjuvant in the first half of 2021. We recorded the total amount of $37.1 million as deferred revenue in our consolidated balance 
sheets as of December 31, 2020.  

Bill & Melinda Gates Foundation Grant Agreement 

In July 2020, we entered into a grant agreement (the "Grant Agreement") with Bill & Melinda Gates Foundation (“BMGF”), 
under which we were awarded a grant of up to $3.4 million to scale up production of our CpG 1018 adjuvant to support the global 
COVID-19 response (the “Project”) and we received $1.2 million of the grant from BMGF which we accounted for as deferred 
revenue in our consolidated balance sheets at December 31, 2020. Any grant funds, plus any income, that have not been used for, or 
committed to, the Project must be returned promptly to BMGF upon expiration or termination of the Grant Agreement.  

We and BMGF had also planned to execute a Global Access and Strategy/Commitment Agreement (“GASC Agreement”) in 
connection with the Grant Agreement. Upon execution of the GASC Agreement, we would receive the remaining $2.2 million in grant 
funding. As of February 25, 2021, the GASC Agreement has not been executed and if it is not executed we will not receive the 
remaining grant funding. 

Serum Institute of India Pvt. Ltd. 

In June 2017, we entered into an agreement to provide Serum Institute of India Pvt. Ltd. (“SIIPL”) with technical support. In 

consideration, SIIPL agreed to pay us at an agreed upon hourly rate for services and reimburse certain out-of-pocket expenses. In 
addition, we have rights to commercialization of certain potential products manufactured at the SIIPL facility. For the years ended 
December 31, 2020, 2019 and 2018, we recognized collaboration revenue of $0.9 million, $0.1 million and $1.4 million, respectively.  

79 
 
 
Merck, Sharp & Dohme Corp. 

In February 2018, we entered into a Sublicense Agreement (the “Sublicense Agreement”) with Merck. The Sublicense 
Agreement grants us, under certain non-exclusive U.S. patent rights controlled by Merck which relate to recombinant production of 
hepatitis B surface antigen, the right to manufacture, use, offer for sale, sell and import HEPLISAV-B in the United States and 
includes the right to grant further sublicenses. Under the terms of the Sublicense Agreement, we were obligated to pay $21.0 million 
in three installments. The first, second and third installment of $7.0 million each was paid in February 2018, 2019 and 2020, 
respectively. The Sublicense Agreement expired in April 2020, at which time the license became perpetual, irrevocable, fully paid-up 
and royalty free. As of December 31, 2020, the intangible asset has been fully amortized. At December 31, 2019, the intangible asset, 
net balance was $2.5 million. See Note 6. 

11.  Long-Term Debt  

Long-Term Debt 

On February 20, 2018, we entered into a $175.0 million Loan Agreement with CRG Servicing LLC (“CRG”). Net proceeds 

under the Loan Agreement were $173.3 million. The Term Loans under the Loan Agreement bear interest at a rate equal to 9.5% per 
annum. At December 31, 2020, the effective interest rate was 10.3%. At our option, until September 30, 2023, a portion of the interest 
payments may be paid in kind, and thereby added to the principal. Through December 31, 2020, a portion of our interest was paid in 
kind, which increased the principal amount of the Term Loans to $180.9 million, net of debt discount of $1.1 million. The Term Loans 
have a maturity date of December 31, 2023, unless earlier prepaid. The Term Loans and paid-in-kind interest will be entirely payable 
at maturity.  

In August 2019, we entered into a second amendment to the Loan Agreement (the “Second Amendment”). The Second 
Amendment amended the annual net sales threshold for sales of HEPLISAV-B, revising the twelve-month measurement periods from 
beginning on January 1 of each year to beginning on July 1 of each year and ending on June 30, 2023. The Second Amendment also 
revised the fee payable upon partial prepayment or at maturity of the Term Loans from 3% to 4% of the aggregate principal amounts.  

In November 2020, we entered into a third amendment to the Loan Agreement (the “Third Amendment”). The Third 
Amendment modified the annual net sales threshold requirement to include sales of CpG 1018 and removed the annual net sales 
threshold requirement for the twelve-month period beginning July 1, 2020 and ending on June 30, 2021. 

The obligations under the Loan Agreement are secured, subject to customary permitted liens and other agreed upon exceptions, 
by a perfected security interest in (i) all tangible and intangible assets of the Company and any future subsidiary guarantors, except for 
certain customary excluded property, and (ii) all of the capital stock owned by the Company and such future subsidiary guarantors 
(limited, in the case of the stock of certain non-U.S. subsidiaries of the Company and certain U.S. subsidiaries substantially all of 
whose assets consist of equity interests in non-U.S. subsidiaries, to 65% of the capital stock of such subsidiaries, subject to certain 
exceptions). The obligations under the Loan Agreement will be guaranteed by each of the Company’s future direct and indirect 
subsidiaries (other than certain non-U.S. subsidiaries of the Company and certain U.S. subsidiaries substantially all of whose assets 
consist of equity interests in non-U.S. subsidiaries, subject to certain exceptions). The Loan Agreement contains customary covenants 
and requires us to comply with a $15.0 million daily minimum combined cash and investment balance covenant and a twelve-month 
period revenue requirement starting on July 1, 2019 for sales of HEPLISAV-B and CpG 1018. 

We recorded $19.1 million, $16.5 million and $8.8 million of interest expense related to the Term Loans during the year ended 

December 31, 2020, 2019 and 2018, respectively.  

12.  Revenue Recognition 

Our product revenue, net consisted of the following: 

HEPLISAV-B 
CpG 1018 
Total 

   $ 

   $ 

2020 

36,030      $ 
3,277        
39,307      $ 

Year Ended 
December 31 
2019 

34,644      $ 
-        
34,644      $ 

2018 

6,812   
-   
6,812   

80 
 
  
  
  
  
  
  
  
  
     
     
  
     
The following table summarizes balances and activities in HEPLISAV-B product revenue allowance and reserve categories for 

the year ended December 31, 2020 and 2019 (in thousands): 

Balance at 
Beginning of 
Period 

Provisions 
related to current 
period sales 

Credit or payments 
made during 
the period 

Balance 
at End of 
Period 

Year ended December 31, 2020: 

Accounts receivable reserves(1) 
Revenue reserve accruals(2) 
Year ended December 31, 2019: 

Accounts receivable reserves(1) 
Revenue reserve accruals(2) 

   $ 
   $ 

   $ 
   $ 

2,701      $ 
3,893      $ 

1,272      $ 
1,033      $ 

11,417      $ 
6,694      $ 

11,042      $ 
6,632      $ 

(11,282 )    $ 
(4,547 )    $ 

(9,613 )    $ 
(3,772 )    $ 

2,836   
6,040   

2,701   
3,893   

(1)  Reserves are for chargebacks, discounts and other fees. 
(2)  Accruals are for returns, rebates and other fees 

13.  Net Loss Per Share  

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding 

during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares 
outstanding during the period and giving effect to all potentially dilutive common shares using the treasury-stock method. For 
purposes of this calculation, outstanding stock options, stock awards, warrants and Series B Convertible Preferred Stock are 
considered to be potentially dilutive common shares and are only included in the calculation of diluted net loss per share when their 
effect is dilutive. 

Numerator 
Net loss 
Preferred stock deemed dividend 
Net loss allocable to common stockholders, basic 

Removal of change in fair value of warrant liability 

Net loss allocable to common stockholders, diluted 
Denominator 
Weighted average shares used to compute net loss allocable to 
common stockholders per share, basic 

Effect of dilutive warrants 

Weighted average shares used to compute net loss allocable to 
common stockholders per share, diluted 

Year Ended 
December 31, 
2019 

2018 

2020 

 $ 

 $ 

(75,240 )    $ 
-        
(75,240 )      
(4,124 )      
(79,364 )    $ 

(152,600 ) 
(3,267 ) 
(155,867 ) 
-   
(155,867 ) 

 $ 

 $ 

(158,899 ) 
-   
(158,899 ) 
-   
(158,899 ) 

100,753        
751        

72,024   
-   

62,362   
-   

101,504        

72,024   

62,362   

The following were excluded from the calculation of diluted net loss per share as the effect of their inclusion would have been 

anti-dilutive: 

Outstanding securities not included in diluted net loss per 
   share calculation (in thousands): 
Stock options and stock awards 
Series B Convertible Preferred Stock (as converted to common stock) 
Warrants (as exercisable into common stock) 

2020 

December 31, 
2019 

2018 

10,299   
4,140   
-   

9,789   
4,840   
5,841   

7,344   
-   
-   

81 
 
 
  
  
    
    
    
  
     
        
          
         
  
     
        
        
        
   
 
 
  
 
  
  
 
  
  
 
  
 
  
 
  
   
        
   
   
   
   
   
   
   
   
   
   
        
   
   
   
 
  
   
   
   
 
  
 
  
 
 
  
 
  
  
 
  
 
  
 
  
 
  
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
14.  Common Stock  

Common Stock Outstanding 

As of December 31, 2020, there were 110,189,859 shares of our common stock outstanding. 

In August 2019, we sold (i) 18,525,000 shares of our common stock, par value $0.001 per share, (ii) 4,840 shares of our Series 

B Preferred Stock, par value $0.001 per share (“Series B Preferred Stock”) and (iii) warrants to purchase up to an aggregate of 
5,841,250 shares of our common stock in an underwritten public offering (the “Offering”). Each share of common stock was sold 
together with a warrant to purchase 0.25 shares of common stock, at a combined price of $3.00 per share of common stock and the 
accompanying warrant. Each share of Series B Preferred Stock was sold together with a warrant to purchase 250 shares of common 
stock, at a combined price of $3,000 per share and the accompanying warrant. Proceeds from the Offering were approximately $65.6 
million, net of issuance costs of $4.5 million. 

Investment funds associated with Bain Capital Life Sciences Investors, LLC (Bain Capital Life Sciences) purchased 
approximately $35.0 million of common stock, Series B Preferred Stock and warrants in this Offering at the public offering price. 
Pursuant to the Offering, (i) Bain Capital Life Sciences Fund, L.P. purchased 6,826,266 shares of common stock, 3,756 shares of 
Series B Preferred Stock and warrants to purchase 2,645,566 shares of common stock for a total purchase price of approximately 
$31.7 million and (ii) BCIP Life Sciences Associates, L.P. purchased 698,734 shares of common stock, 384 shares of Series B 
Preferred Stock and warrants to purchase 270,684 shares of common stock for a total purchase price of approximately $3.2 million 
(together, “Bain Life Sciences Funds”). Bain Capital Life Sciences is the general partner of Bain Life Sciences Funds. The 
participation by these investors was on the same terms as the other investors in the Offering.   

Following the offering, Andrew A. F. Hack, M.D., Ph.D and Managing Director of Bain Capital Life Sciences (a related party), 

was appointed to our board of directors.  

On March 11, 2020, we entered into a warrant exchange agreement with Bain Life Sciences Funds pursuant to which we agreed 

that we would, upon future notice from Bain Life Sciences Funds, exchange all or a portion of the common stock warrants held by 
Bain Life Sciences Funds for warrants to purchase a new Series C convertible preferred stock (“Series C Warrants”). Each share of 
Series C convertible preferred stock would be convertible into 1,000 shares of common stock, with a conversion price of $4.50 and 
would have substantially identical rights to our Series B Preferred Stock. As of December 31, 2020, Bain Life Sciences Funds have 
not exercised their rights to exchange common stock warrants with Series C Warrants. 

In May 2020, we completed an underwritten public offering of 16,100,000 shares of our common stock, par value $0.001 per 

share, including 2,100,000 shares sold pursuant to the full exercise of an overallotment option previously granted to the underwriters. 
All of the shares were offered at a price to the public of $5.00 per share. The net proceeds to us from this offering were approximately 
$75.4 million, after deducting the underwriting discount and other offering expenses payable by us. Bain Life Sciences Funds 
purchased 1,000,000 shares of common stock in the underwritten public offering. The participation by Bain Life Sciences Funds was 
on the same terms as the other investors in the offering.  

For year ended December 31, 2020, we sold 8,005,467 shares of our common stock and received net cash proceeds of $32.3 

million pursuant to a 2017 At Market Sales Agreement (“2017 ATM Agreement”) with Cowen and Company, LLC (“Cowen”) that 
terminated in August 2020. 

On August 6, 2020, we entered into an at-the-market Sales Agreement (the “2020 ATM Agreement”) with Cowen, under which 
we may offer and sell from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to 
$150 million through Cowen as our sales agent. 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 2020 ATM Agreement. For the year ended December 31, 2020, we received net cash 
proceeds of $0.8 million resulting from sales of 109,176 shares of our common stock pursuant to the 2020 ATM Agreement. As of 
December 31, 2020, we had $149.1 million remaining under the 2020 ATM Agreement. Subsequent to December 31, 2020 and 
through February 22, 2021, we sold 2,299,952 shares of common stock for net proceeds of $22.7 million under the 2020 ATM 
Agreement. 

82 
 
Preferred Stock Outstanding 

As of December 31, 2020, there were 4,140 shares of Series B Preferred Stock outstanding. 

In the second quarter of 2020, 700 shares of our Series B Preferred Stock were converted into 700,000 shares of common stock. 

Each share of Series B Preferred Stock is convertible into 1,000 shares of common stock at any time at the holder’s option. 
However, the holder is prohibited from converting the Series B Preferred Stock into shares of common stock if, as a result of such 
conversion, the holder and its affiliates would own more than 4.99% of the total number of shares of common stock then issued and 
outstanding, which percentage may be changed at the holders’ election to a higher or lower percentage (not to exceed 19.99%) upon 
61 days’ notice to the Company. In the event of liquidation, dissolution, or winding up, the holder of Series B Preferred Stock will 
receive payment on shares of Series B Preferred Stock (determined on an as-converted to common stock basis) equal to the amount 
that would be paid on our common stock. Shares of Series B Preferred Stock generally have no voting rights, except as required by 
law and except that the consent of holders of a majority of the outstanding Series B Preferred Stock is required to amend the terms of 
the Series B Preferred Stock. Holders of Series B Preferred Stock are not entitled to receive any dividends, unless and until 
specifically declared by our board of directors. The Series B Preferred Stock ranks on parity with our common stock as to distributions 
of assets upon liquidation, dissolution or winding up. The Series B Preferred Stock may rank senior to, on parity with or junior to any 
class or series of capital stock created in the future depending upon the specific terms of such future stock issuance. 

The fair value of the common stock into which the Series B Preferred Stock is convertible exceeded the allocated purchase price 

of the Series B Preferred Stock by $3.3 million on the date of issuance, for which we recorded a deemed dividend. We recognized a 
deemed dividend equal to the number of common stock into which the Series B Preferred Stock is convertible multiplied by the 
difference between the value of the common stock and the Series B Preferred Stock conversion price per share on the date of issuance, 
which is the date the stock first became convertible. The dividend was reflected as a one-time, non-cash, deemed dividend to the 
holders of Series B Preferred Stock on the date of issuance. 

Warrants 

As of December 31, 2020, the following common stock warrants were outstanding: 

Warrants Issuance Date 
August 12, 2019 

Shares Issuable 
(in thousands) 
5,841 

Expiration Date 

      February 12, 2022 

  $ 

Exercise Price 
per Share 
4.50 

Outstanding as of 
December 31, 2020 
(in thousands) 
5,841 

In February 2021, 750,000 of our common stock warrants were exercised. 

Warrants were exercisable upon issuance. The holder is prohibited from exercising these warrants if, as a result of such exercise, 

the holder and its affiliates, would own more than 4.99% of the total number of shares of common stock then issued and outstanding, 
which percentage may be changed at the holders’ election to a higher or lower percentage (not to exceed 19.99%) upon 61 days’ 
notice to the Company. 

The warrants contain provisions that may obligate us to repurchase them for an amount that does not represent fair value in the 

event of a change of control. Due to this provision, the warrants do not meet the criteria to be considered indexed to our own stock. 
Accordingly, we recorded the warrants as a derivative liability at fair value of $7.4 million on the issuance date, which was estimated 
using the Black-Scholes model.  

The warrants will be revalued at each reporting period using the Black-Scholes model and the change in the fair value of the 
warrants will recognized as other income (expense) in the consolidated statements of operations. At December 31, 2020 and 2019, the 
estimated fair value of warrant liability was $10.7 million and $14.9 million, respectively. For the year ended December 31, 2020, we 
recognized $4.1 million decrease in the estimated fair value of warrant liability as income in other income (expense) in our 
consolidated statements of operations. For the year ended December 31, 2019, we recognized $7.5 million increase in the estimated 
fair value of warrant liability as a loss in other income (expense) in our consolidated statements of operations. 

15.  Equity Plans and Stock-Based Compensation 

Equity Plans  

Our 2018 Equity Incentive Plan (the “2018 EIP”) is intended to be the successor to and continuation of the Dynavax 

Technologies Corporation 2011 Equity Incentive Plan (the “2011 EIP”). The aggregate number of shares of our common stock that 

83 
 
  
  
     
  
     
  
     
       
  
 
 
 
may be issued under the 2018 EIP (subject to adjustment for certain changes in capitalization) is comprised of the sum of (i) 5,000,000 
newly reserved shares of common stock, (ii) 140,250 unallocated shares of common stock remaining available for grant under the 
2011 EIP as of May 31, 2018, and (iii) 7,477,619 shares subject to outstanding stock awards granted under the 2011 EIP and the 
Dynavax Technologies Corporation 2017 Inducement Award Plan that may become available from time to time as set forth in the 
2018 EIP. The 2018 EIP provides for the issuance of up to 12,617,869 shares of our common stock to our employees and directors.  

On May 28, 2020 and on May 30, 2019, our stockholders approved an amendment to 2018 Equity Incentive Plan (the 
“Amended 2018 EIP”) to, among other things, increase the aggregate number of shares of common stock authorized for issuance by 
7,600,000 and 2,300,000, respectively. Under the Amended 2018 EIP, the aggregate number of shares of our common stock that may 
be issued to employees and directors (subject to adjustment for certain changes in capitalization) is 22,517,869. 

In January 2021, we adopted the Dynavax Technologies Corporation 2021 Inducement Award Plan, pursuant to which we 
reserved 1,500,000 shares of common stock for issuance under the plan to be used exclusively for grants of awards to individuals who 
were not previously employees or directors of the Company.  

The Amended 2018 EIP is administered by our Board of Directors, or a designated committee of the Board of Directors, and 

awards granted under the Amended 2018 EIP have a term of 7 years unless earlier terminated by the Board of Directors. As of 
December 31, 2020, there were 8,349,853 shares of common stock reserved for issuance under the Amended 2018 EIP. 

Activity under our stock plans is set forth below:  

Shares Underlying 
Outstanding Options 
(in thousands) 

Weighted-Average Exercise 
Price Per Share 

Weighted-Average 
Remaining 
Contractual Term 
(years) 

Aggregate 
Intrinsic Value 
(in thousands)    

Balance at December 31, 2019 

Options granted 
Options exercised 
Options cancelled: 

Options forfeited (unvested) 
Options expired (vested) 

Balance at December 31, 2020 

Vested and expected to vest at 
   December 31, 2020 
Exercisable at December 31, 2020 

 $ 

8,006   
2,003   
(72 ) 

(356 ) 
(1,076 ) 
8,505   

8,314   

5,551   

 $ 

$ 

 $ 

13.86   
5.76   
4.20   

7.24   
19.75   
11.57   

11.69   

14.13   

4.25   

 $ 

4.21   

3.35   

 $ 

 $ 

616   

607   

516   

The total intrinsic value of stock options exercised during the years ended December 31, 2020, 2019 and 2018 was $0.1 million, 

$26,000 and $0.2 million, respectively. The total intrinsic value of exercised stock options is calculated based on the difference 
between the exercise price and the quoted market price of our common stock as of the close of the exercise date. 

The total fair value of stock options vested during the years ended December 31, 2020, 2019 and 2018 was $13.8 million, $19.5 

million and $8.1 million, respectively.  

Our non-vested stock awards are comprised of restricted stock units granted with performance and time-based vesting criteria. A 

summary of the status of non-vested restricted stock units as of December 31, 2020, and activities during 2020 are summarized as 
follows:   

Non-vested as of December 31, 2019 
Granted 
Vested 
Forfeited 
Non-vested as of December 31, 2020 

Number of Shares 
(In thousands) 

Weighted-Average 
Grant-Date Fair Value 

1,784   
1,412   
(1,139 ) 
(263 ) 
1,794   

 $ 

 $ 

9.16   
5.64   
8.18   
7.68   
7.23   

Stock-based compensation expense related to restricted stock units was approximately $4.9 million for the year ended December 

31, 2020. The aggregate intrinsic value of the restricted stock units outstanding as of December 31, 2020, based on our stock price on 
that date, was $8.0 million.  

84 
 
  
  
 
  
 
  
 
  
 
   
     
  
     
  
   
   
     
  
     
  
   
   
     
  
     
  
   
   
      
  
     
  
     
  
   
   
     
  
     
  
   
   
     
  
     
  
   
   
 
  
 
   
   
   
  
  
  
  
  
  
  
  
   
  
   
  
   
  
 
The total fair value of restricted stock units vested during the years ended December 31, 2020, 2019 and 2018 was $4.9 million, 

$7.9 million and $19.4 million, respectively. 

Stock-Based Compensation  

Under our stock-based compensation plans, option awards generally vest over a three-year or four-year period contingent upon 

continuous service and unless exercised, expire seven or ten years from the date of grant (or earlier upon termination of continuous 
service). The Company has also granted performance-based equity awards to certain of our employees. As of December 31, 2020, 
approximately 117,000 shares underlying stock options and approximately 247,000 restricted stock unit awards with performance-
based vesting criteria were outstanding. None of the awards with performance-based vesting criteria were deemed probable as of 
December 31, 2020. We recognized stock-based compensation expense for awards with performance-based vesting criteria during the 
years ended December 31, 2020, 2019 and 2018 of $0.1 million, $0.5 million and $1.9 million, respectively. 

The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model and the following 

weighted-average assumptions: 

Weighted-average fair value 
Risk-free interest rate 
Expected life (in years) 
Expected Volatility 

Stock Options 
Year Ended December 31, 

   Employee Stock Purchase Plan 

Year Ended December 31, 

2020 

   2019 

   2018 

   2020 

   2019 

   2018 

   $ 

3.91   

 $ 

4.58   

 $  10.75   

 $ 

2.82       $ 

2.72       $ 

8.30   

1.0 % 
4.5   
0.9   

2.1 % 
4.5   
0.9   

2.5 % 
4.2   
0.8   

0.9 % 
1.2      
0.7      

1.9 % 
1.2      
0.7      

2.4 % 
1.3   
1.1   

Expected volatility is based on historical volatility of our stock price. The expected life of options granted is estimated based on 
historical option exercise and employee termination data. Our senior management, who hold a majority of the options outstanding, and 
other employees were grouped and considered separately for valuation purposes. The risk-free rate for periods within the contractual 
life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Forfeiture estimates are based on historical 
employee turnover. The dividend yield is zero percent for all years and is based on our history and expectation of dividend payouts.  

Compensation expense is based on awards ultimately expected to vest and reflects estimated forfeitures. For equity awards with 

time-based vesting, the fair value is amortized to expense on a straight-line basis over the vesting periods. For equity awards with 
performance-based vesting criteria, the fair value is amortized to expense when the achievement of the vesting criteria becomes 
probable. Stock-based compensation for the year ended December 31, 2020 included reversal of expenses related to cancellation of 
certain equity grants in the first quarter of 2020. Stock-based compensation cost for the year ended December 31, 2019 includes 
incremental cost of $4.1 million for accelerated vesting of stock awards and extension of exercise period of stock options in 
connection with the retirement of our Chief Executive Officer. See Note 17. 

We recognized the following amounts of stock-based compensation expense (in thousands):  

Employees and directors stock-based compensation expense 

   $ 

13,484   

 $ 

25,456   

 $ 

23,478   

Year Ended December 31, 
2019 

2020 

2018 

Research and development 
Selling, general and administrative 
Cost of sales - product 
Inventory 
Restructuring 
Total 

Year Ended December 31, 
2019 

2020 

2018 

   $ 

   $ 

1,000   
9,585   
619   
2,280   
-   
13,484   

 $ 

 $ 

8,058   
10,224   
1,088   
1,964   
4,122   
25,456   

 $ 

 $ 

9,604   
11,761   
1,354   
759   
-   
23,478   

As of December 31, 2020, the total unrecognized compensation cost related to non-vested stock options and awards deemed 
probable of vesting, including all stock options with time-based vesting, net of estimated forfeitures, amounted to $15.9 million, which 
is expected to be recognized over the remaining weighted-average vesting period of 1.8 years. Additionally, as of December 31, 2020, 
the total unrecognized compensation cost related to equity awards with performance-based vesting criteria amounted to $1.2 million.  

85 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
   
   
   
   
   
  
  
   
   
   
  
  
  
  
   
   
   
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
    
    
    
    
    
  
  
  
  
  
  
  
  
  
  
  
  
  
   
   
  
  
   
   
  
  
   
   
  
  
   
   
 
Employee Stock Purchase Plan  

The Amended and Restated 2014 Employee Stock Purchase Plan (the “Purchase Plan”) provides for the purchase of common 
stock by eligible employees and became effective on May 28, 2014. On May 31, 2018, our stockholders approved an amendment to 
the Purchase Plan to increase the aggregate number of shares of common stock authorized for issuance by 600,000 shares. The 
purchase price per share is the lesser of (i) 85% of the fair market value of the common stock on the commencement of the two-year 
offer period (generally, the sixteenth day in February or August) or (ii) 85% of the fair market value of the common stock on the 
exercise date, which is the last day of a purchase period (generally, the fifteenth day in February or August). For the year ended 
December 31, 2020, employees have acquired 195,334 shares of our common stock under the Purchase Plan and 255,583 shares of our 
common stock remained available for future purchases under the Purchase Plan.  

As of December 31, 2020, the total unrecognized compensation cost related to shares of our common stock under the Purchase 

Plan amounted to $0.2 million, which is expected to be recognized over the remaining weighted-average vesting period of 1 year. 

16.  Employee Benefit Plan  

We maintain a 401(k) Plan, which qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue 

Code. Under the 401(k) Plan, participating employees may defer a portion of their pretax earnings. We may, at our discretion, 
contribute for the benefit of eligible employees. The Company’s contribution to the 401(k) Plan was approximately $0.2 million, $0.3 
million and $0.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.  

17.  Restructuring  

On May 23, 2019, we implemented a strategic organizational restructuring, principally to align our operations around our 
vaccine business and significantly curtail further investment in our immuno-oncology business. In connection with the restructuring, 
we reduced our workforce by approximately 80 positions, or approximately 36%, of U.S.-based personnel. Also, in connection with 
the restructuring, our Chief Executive Officer, also a member of the Board of Directors (the “Board”), submitted notice of his 
retirement from the Company and the Board, effective August 1, 2019. As of December 31, 2020, we have completed our 
restructuring activities and all costs have been incurred.   

The major components of our restructuring costs are summarized as follows (in thousands): 

Components of Restructuring Costs 

Severance and other termination benefits 
Stock-based compensation expense (a) 
Accelerated depreciation 
Total restructuring cost 

Restructuring Costs 
Incurred for the 
Year Ended 
December 31, 2019 

   $ 

   $ 

6,277   
4,122   
2,957   
13,356   

(a)  As a result of accelerated vesting of stock awards and the extension of exercise period of stock options 

The outstanding restructuring liabilities are included in accrued liabilities on the consolidated balance sheets. As of December 

31, 2020 and 2019, the components of the restructuring liabilities were as follows (in thousands): 

Balance at December 31, 2018 
Severance and other termination benefits 
Cash payments or settlements 
Balance at December 31, 2019 
Cash payments or settlements 
Balance at December 31, 2020 

Severance and Other 
Termination Benefits 

$ 

$ 

$ 

-   
6,277   
(5,602 ) 
675   
(675 ) 
-   

86 
 
 
 
 
 
 
  
  
  
  
  
  
 
 
  
  
  
  
  
 
 
18. 

Income Taxes 

Consolidated (loss) income before provision for income taxes consisted of the following (in thousands):  

U.S. 
Non U.S. 
Total 

Year Ended December 31, 
2019 

2018 

2020 

   $ 

   $ 

(76,324 )    $ 
1,084        
(75,240 )    $ 

(154,605 )    $ 
2,005        
(152,600 )    $ 

(160,032 ) 
1,133   
(158,899 ) 

No income tax expense was recorded for the years ended December 31, 2020, 2019 and 2018 due to our full valuation 
allowance position. The difference between the consolidated income tax benefit and the amount computed by applying the federal 
statutory income tax rate to the consolidated loss before income taxes was as follows (in thousands): 

Income tax benefit at federal statutory rate 
State tax 
Business credits 
Uncertain tax positions 
Deferred compensation charges 
Change in valuation allowance 
Section 162(m) limitation 
Mark-to-market of warrants 
Other 
Total income tax expense 

Year Ended December 31, 
2019 

2018 

2020 

   $ 

   $ 

(15,756 )    $ 
(3,194 )      
(773 )      
193        
809        
19,009        
473        
(866 )      
105        
-      $ 

(32,046 )    $ 
(3,153 )      
(1,757 )      
5,426        
4,600        
22,715        
2,439        
1,575        
201        
-      $ 

(33,366 ) 
(5,591 ) 
(3,065 ) 
-   
(1,165 ) 
43,134   
-   
-   
53   
-   

Deferred tax assets and liabilities consisted of the following (in thousands):  

Deferred tax assets: 

Net operating loss carry forwards 
Research tax credit carry forwards 
Accruals and reserves 
Capitalized research costs 
Other 

Total deferred tax assets 
Less valuation allowance 
Net deferred tax assets 
Deferred tax liabilities: 
Fixed assets 
Operating lease right-of-use assets 

Total deferred tax liabilities 
Net deferred tax assets 

December 31, 

2020 

2019 

224,161      $ 
28,578        
17,264        
-        
3,250        
273,253        
(266,100 )      
7,153        

(275 )      
(6,878 )      
(7,153 )      
-      $ 

207,385   
27,883   
17,312   
256   
2,437   
255,273   
(247,092 ) 
8,181   

(275 ) 
(7,906 ) 
(8,181 ) 
-   

   $ 

   $ 

The tax benefit of net operating losses, temporary differences and credit carryforwards is required to be recorded as an asset to 
the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on 
our ability to generate sufficient taxable income within the carryforward period. Because of our recent history of operating losses, 
management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not 
likely to be realized and, accordingly, has provided a full valuation allowance. The valuation allowance increased by $19.0 million 
and $22.3 million for the years ended December 31, 2020 and 2019, respectively, due to an increase in our deferred tax assets.   

As of December 31, 2020, we had federal net operating loss carryforwards of approximately $955.0 million, which will begin to 

expire in the year 2021 and federal research and development tax credits of approximately $22.5 million, which expire in the years 
2021 through 2040.  

87 
 
 
  
  
  
  
  
    
    
  
     
 
 
  
  
  
  
  
     
     
  
     
     
     
     
     
     
     
     
 
 
  
  
  
  
  
    
  
       
         
  
     
     
     
     
     
     
     
       
         
  
     
     
     
 
As of December 31, 2020, we had net operating loss carryforwards for California and other states for income tax purposes of 

approximately $373.2 million, which expire in the years 2021 through 2040, and California state research and development tax credits 
of approximately $19.8 million, which do not expire. 

As of December 31, 2020, we had net operating loss carryforwards for foreign income tax purposes of approximately $6.7 

million, which do not expire. 

Uncertain Income Tax positions 

The total amount of unrecognized tax benefits was $10.6 million and $10.3 million as of December 31, 2020 and 2019, 

respectively. If recognized, none of the unrecognized tax benefits would affect the effective tax rate.  

The following table summarizes the activity related to our unrecognized tax benefits: 

Balance at December 31, 2019 

Tax positions related to the current year 

Additions 
Reductions 

Tax positions related to the prior year 

Additions 
Reductions 

Balance at December 31, 2020 

   $ 

(10,322 ) 

(243 ) 
-   

-   
-   
(10,565 ) 

   $ 

Our policy is to account for interest and penalties as income tax expense. As of December 31, 2020, there was no interest related 

to unrecognized tax benefits. No amounts of penalties related to unrecognized tax benefits were recognized in the provision for 
income taxes. We do not anticipate any significant change within 12 months of this reporting date of its uncertain tax positions. 

The Tax Reform Act of 1986 limits the annual use of net operating loss and tax credit carryforwards in certain situations where 
changes occur in stock ownership of a company. In the event there is a change in ownership, as defined, the annual utilization of such 
carryforwards could be limited. Based on an analysis under Section 382 of the Internal Revenue Code, completed through December 
31, 2018, we experienced ownership changes in 2008, 2009 and 2012 which limit the future use of its pre-change federal net operating 
loss carryforwards and federal research and development tax credits. We excluded these federal net operating loss carryforwards and 
federal research and development tax credits that will expire as a result of the annual limitations in the deferred tax assets as of 
December 31, 2020. A limitation calculation has not been performed with respect to the California net operating loss carryforwards 
and research and development tax credits and we believe that our ability to use these California net operating loss carryforwards and 
research and development tax credits in the future may be limited. We have not completed an analysis and a limitation calculation has 
not been performed subsequent to the period ending December 31, 2018. Due to equity issuances in 2020 and 2019 and changes in 
ownership of our common stock, we believe that our net operating losses and tax credits in the future may be further limited. 

We are subject to income tax examinations for U.S. federal and state income taxes from 2001 forward. We are subject to tax 

examination in Germany from 2017 forward and in India from 2018 forward. 

19.  Subsequent Event 

CEPI Agreement 

On January 29, 2021, we entered into an agreement (the “Agreement”) with CEPI for the manufacture and reservation of a 
specified quantity of CpG 1018 (“CpG 1018 Materials”). The Agreement enables CEPI to direct the supply of CpG 1018 Materials to 
CEPI partner(s). CEPI partner(s) would purchase CpG 1018 Materials under separately negotiated agreements, subject to specified 
pricing requirements. The Agreement also allows us to sell CpG 1018 Materials to third-parties if not purchased by a CEPI partner 
within a defined period of time. 

In exchange for reserving CpG 1018 Materials, CEPI has agreed to provide an interest-free, unsecured, forgivable loan of up to 

$99 million (the “Loan Amount”) which is equivalent to the anticipated manufacturing costs of CpG 1018 Materials. The Loan 
Amount will be funded in part upon the execution of the Agreement, in part upon the exercise of CEPI’s option to reserve additional 
quantity of CpG 1018 Materials and in part upon the release of CpG 1018 Materials. We are obligated to repay the Loan Amount, on a 
proportional basis, if and to the extent we receive payment for CpG 1018 Materials reserved under the Agreement. If the vaccine 
programs pursued by CEPI partner(s) are unsuccessful and no alternative use is found for CpG 1018 Materials reserved under the 
Agreement, the applicable Loan Amount will be forgiven.  

88 
 
 
  
    
  
  
  
  
  
  
    
  
  
  
  
  
 
 
 
Amendment to CRG Loan Agreement 

On January 29, 2021, we entered into a fourth amendment to the Loan Agreement with CRG (the “Fourth Amendment”). The 

Fourth Amendment amended the Loan Agreement to, among other things, allow us to enter into the Agreement with CEPI and to 
perform our obligations thereunder. 

89 
 
ITEM 9. 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 
DISCLOSURE  

None. 

ITEM 9A. 

CONTROLS AND PROCEDURES  

(a) Evaluation of Disclosure Controls and Procedures  

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange 
Act of 1934 (“the Exchange Act”)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is 
recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and 
forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and 
Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the 
disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and 
operated, can only provide reasonable, not absolute, assurance of achieving the desired control objectives.  

Based on their evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end 

of the period covered by this report, our management, with the participation of our Chief Executive Officer and our Chief Financial 
Officer, concluded that our disclosure controls and procedures are effective and were operating at the reasonable assurance level to 
ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, 
summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.  

(b) Management’s Annual Report on Internal Control Over Financial Reporting  

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in 

Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management, with the participation of our Chief Executive Officer and 
Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 
framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway 
Commission (2013 Framework). Based on that evaluation, our management concluded that our internal control over financial 
reporting was effective as of December 31, 2020. The Company’s independent registered public accountants, Ernst & Young LLP, 
audited the consolidated financial statements included in this Annual Report on Form 10-K and have issued a report on the Company’s 
internal control over financial reporting. The report on the audit of internal control over financial reporting appears below. 

90 
 
Report of Independent Registered Public Accounting Firm 

To the Stockholders and the Board of Directors of Dynavax Technologies Corporation 

Opinion on Internal Control over Financial Reporting 

We have audited Dynavax Technologies Corporation’s internal control over financial reporting as of December 31, 2020, based on 
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway 
Commission (2013 framework) (the COSO criteria). In our opinion, Dynavax Technologies Corporation (the Company) maintained, 
in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria. 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) 
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, and the related consolidated 
statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended 
December 31, 2020 and the related notes of the Company and our report dated February 25, 2021 expressed an unqualified opinion 
thereon. 

Basis for Opinion 

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment 
of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on 
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial 
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with 
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities 
and Exchange Commission and the PCAOB. 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness 
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such 
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our 
opinion. 

Definition and Limitations of Internal Control Over Financial Reporting 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of 
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting 
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the 
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the 
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in 
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in 
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding 
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect 
on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections 
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in 
conditions, or that the degree of compliance with the policies or procedures may deteriorate. 

/s/ Ernst & Young LLP 
San Francisco, California 
February 25, 2021 

(c) Changes in Internal Control Over Financial Reporting  

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially 

affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

ITEM 9B.  OTHER INFORMATION  

None. 

91 
 
 
  
 
 
PART III  

ITEM 10. 

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  

Information required by this Item is incorporated by reference to the sections entitled “Proposal 1—Elections of Directors,” 

“Executive Officers,” “Corporate Governance” and “Delinquent Section 16(a) Reports” in our Definitive Proxy Statement in 
connection with the 2021 Annual Meeting of Stockholders (the “Proxy Statement”) which will be filed with the Securities and 
Exchange Commission within 120 days after the fiscal year ended December 31, 2020.  

We have adopted the Dynavax Code of Business Conduct and Ethics (“Code of Conduct”), a code of ethics that applies to our 

employees, including our Chief Executive Officer, Chief Financial Officer and to our non-employee directors. The Code of Conduct is 
publicly available on our website under the Investors and Media section at www.dynavax.com. This website address is intended to be 
an inactive, textual reference only; none of the material on this website is part of this report. If any substantive amendments are made 
to the Code of Conduct or any waiver granted, including any implicit waiver, from a provision of the Code of Conduct to our Chief 
Executive Officer or Chief Financial Officer, we will disclose the nature of such amendment or waiver on that website or in a report 
on Form 8-K. We will provide a written copy of the Dynavax Code of Conduct to anyone without charge, upon request written to 
Dynavax, Attention: Corporate Secretary, 2100 Powell Street, Suite 900, Emeryville, CA 94608, (510) 848-5100.  

ITEM 11. 

EXECUTIVE COMPENSATION  

Information required by this Item is incorporated by reference to the section entitled “Executive Compensation Program,” 

“Director Compensation,” “Compensation Overview,” “Report of the Compensation Committee of the Board of Directors on 
Executive Compensation,” “Outstanding Equity Awards at Fiscal Year End” and “Compensation Committee Interlocks and Insider 
Participation” in the Proxy Statement.  

ITEM 12. 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED 
STOCKHOLDER MATTERS  

Information regarding security ownership of certain beneficial owners and management is incorporated by reference to the 
section entitled “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement. Information regarding 
our stockholder approved and non-approved equity compensation plans are incorporated by reference to the section entitled “Equity 
Compensation Plans” in the Proxy Statement.  

ITEM 13. 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE  

Information required by this Item is incorporated by reference to the sections entitled “Certain Transactions With Related 

Parties” and “Independence of the Board of Directors” in the Proxy Statement.  

ITEM 14. 

PRINCIPAL ACCOUNTING FEES AND SERVICES  

Information required by this Item is incorporated by reference to the section entitled “Audit Fees” in the Proxy Statement. 

92 
 
PART IV 

ITEM 15. 

EXHIBITS, FINANCIAL STATEMENT SCHEDULES  

(a) Documents filed as part of this report:  

1. Financial Statements  

Report of Independent Registered Public Accounting Firm  

Consolidated Balance Sheets  

Consolidated Statements of Operations  

Consolidated Statements of Comprehensive Loss  

Consolidated Statements of Stockholders’ Equity  

Consolidated Statements of Cash Flows  

Notes to Consolidated Financial Statements  

2. Financial Statement Schedules  

None, as all required disclosures have been made in the Consolidated Financial Statements and notes thereto or are not 

applicable.  

(b) Exhibits 

Exhibit 
Number 

Document 

Exhibit 
Number 

Filing 

Filing Date 

File No. 

Filed Herewith 

Incorporated by Reference 

3.1 

3.2 

3.3 

3.4 

3.5 

3.6 

3.7 

3.8 

3.9 

Sixth Amended and Restated Certificate 
of Incorporation 

Amended and Restated Bylaws 

Form of Certificate of Designation of 
Series A Junior Participating Preferred 
Stock  

Certificate of Amendment of Amended 
and Restated Certificate of Incorporation  

Certificate of Amendment of Amended 
and Restated Certificate of Incorporation  

Certificate of Amendment of Amended 
and Restated Certificate of Incorporation  

Certificate of Amendment of the Sixth 
Amended and Restated Certificate of 
Incorporation 

Certificate of Amendment of the Sixth 
Amended and Restated Certificate of 
Incorporation 

Certificate of Amendment of the Sixth 
Amended and Restated Certificate of 
Incorporation 

3.1 

S-1/A 

February 5, 2004 

333-109965 

3.8 

3.3 

3.1 

3.1 

3.6 

3.1 

10-Q 

November 6, 2018 

001-34207 

8-K 

November 6, 2008 

000-50577 

8-K 

January 4, 2010 

001-34207 

8-K 

January 5, 2011 

001-34207 

8-K 

May 30, 2013 

001-34207 

8-K 

November 10, 2014 

001-34207 

3.1 

8-K 

June 2, 2017 

001-34207 

3.1 

8-K 

July 31, 2017 

001-34207 

3.10 

Certificate of Amendment of the Sixth 
Amended and Restated Certificate of 
Incorporation 

3.1 

8-K 

May 29, 2020 

001-34207 

93 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 
Number 

3.11 

4.1 

4.2 

4.3 

4.4 

4.5 

10.1 

10.2+ 

10.3+ 

10.4+ 

10.6+ 

10.7† 

10.8† 

10.9† 

Document 

Certificate of Designation of 
Preferences, Rights and Limitations of 
Series B Convertible Preferred Stock 

Description of Capital Stock 

Reference is made to Exhibits 3.1, 3.2, 
3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10 and 
3.11 above 

Form of Specimen Common Stock 
Certificate  

Form of Series B Preferred Stock 
Certificate 

Form of Warrant to Purchase Common 
Stock  

Amended and Restated Purchase Option 
Agreement, dated November 9, 2009, 
between the Company and Symphony 
Dynamo Holdings LLC and Symphony 
Dynamo, Inc. 

Employment Agreement, dated July 12, 
2013, by and between Robert Janssen, 
M.D. and the Company 

Amended and Restated 2014 Employee 
Stock Purchase Plan  

Form of Amended and Restated 
Management Continuity and Severance 
Agreement between the Company and 
certain of its executive officers  

Incorporated by Reference 

Exhibit 
Number 

3.1 

Filing 

8-K 

Filing Date 

File No. 

Filed Herewith 

August 8, 2019 

001-34207 

X 

4.2 

S-1/A 

January 16, 2004 

333-109965 

4.3 

10-Q 

November 7, 2019 

001-34207 

4.1 

8-K 

August 8, 2019 

001-34207 

10.47 

10-K 

March 16, 2010 

001-34207 

10.85 

10-K 

March 10, 2014 

001-34207 

99.4 

S-8 

June 1, 2016 

333-211747 

10.2 

10-Q 

August 7, 2019 

001-34207 

2017 Inducement Award Plan 

10.1 

8-K 

November 30, 2017 

001-34207 

Commercial Manufacturing and Supply 
Agreement, dated November 22, 2013, 
between Company and Baxter 
Pharmaceutical Solutions LLC 

Supply Agreement, dated November 2, 
2016, between Company and Becton, 
Dickinson and Company 

Supply Agreement, dated October 1, 
2012, between Company and Nitto 
Denko Avecia, Inc. 

10.33 

10-K 

March 8, 2018 

001-34207 

10.34 

10-K 

March 8, 2018 

001-34207 

10.35 

10-K 

March 8, 2018 

001-34207 

10.10† 

Supply Agreement, dated July 27, 2016, 
between Company and West 
Pharmaceutical Services, Inc. 

10.36 

10-K 

March 8, 2018 

001-34207 

10.11+  Non-Employee Director Compensation 

10.2 

10-Q 

August 6, 2020 

001-34207 

Policy 

10.12 

Term Loan Agreement, dated as of 
February 20, 2018 among the Company, 
certain Lenders party hereto and CRG 
Servicing LLC, as agent for the Lenders 

10.3 

10-Q 

May 9, 2018 

001-34207 

94 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 
Number 

Document 

10.13+  Amended and Restated 2018 Equity 

Incentive Plan 

Exhibit 
Number 

10.1 

Filing 

10-Q 

Filing Date 

File No. 

Filed Herewith 

August 6, 2020 

001-34207 

Incorporated by Reference 

10.14+ 

10.15+ 

10.16 

10.17+ 

10.18+ 

Form of Restricted Stock Unit Award 
Grant Notice and Restricted Stock Unit 
Award Agreement under the 2018 Equity 
Incentive Plan 

Form of Option Grant Notice and Option 
Agreement under the 2018 Equity 
Incentive Plan 

Office/Laboratory Lease, dated 
September 17, 2018, between the 
Company and Emery Station West, LLC 

Chief Executive Officer Letter, dated 
December 13, 2019, between the 
Company and Ryan Spencer  

President and Chief Operating Officer 
Letter, dated December 13, 2019, 
between the Company and David 
Novack  

10.19+ 

Form of Indemnification Agreement 

10.20 

10.21 

10.22 

Sublease, by and between Dynavax 
Technologies Corporation and 
MedAmerica, Inc. (d/b/a Vituity), dated 
July 2, 2019 

Sublease, by and between Dynavax 
Technologies Corporation and Zymergen 
Inc., dated July 12, 2019 

Amendment No. 2 to Term Loan 
Agreement and Fee Letter, by and 
among Dynavax Technologies 
Corporation, CRG Partners III L.P., 
CRG Partners III–Parallel Fund “A” L.P. 
and CRG Servicing LLC 

10.2 

8-K 

June 1, 2018 

001-34207 

10.3 

8-K 

June 1, 2018 

001-34207 

10.1 

10-Q 

November 6, 2018 

001-34207 

10.17 

10-K 

March 11, 2020 

001-34207 

10.18 

10-K 

March 11, 2020 

001-34207 

10.1 

10.2 

10-Q 

10-Q 

November 7, 2019 

001-34207 

November 7, 2019 

001-34207 

10.3 

10-Q 

November 7, 2019 

001-34207 

10.4 

10-Q 

November 7, 2019 

001-34207 

10.23+  Dynavax Technologies Corporation U.S. 

10.23 

10-K 

March 11, 2020 

001-34207 

Annual Bonus Plan 

10.24 

Registration Rights Agreement, dated 
March 11, 2020, by and among the 
Company, Bain Capital Life Sciences 
Fund, L.P. and BCIP Life Sciences 
Associates, LP. 

99.D 

13D/A 

March 12, 2020 

005-80035 

10.25  Warrant Exchange Agreement, dated 

99.E 

13D/A 

March 12, 2020 

005-80035 

March 11, 2020, by and among the 
Company, Bain Capital Life Sciences 
Fund, L.P. and BCIP Life Sciences 
Associates, LP 

10.26^ 

Supply Agreement, dated September 11, 
2020, by and among the Company, 
Valneva Scotland Limited and Valneva 
Austria GmbH 

10.2 

10-Q 

November 5, 2020 

001-34207 

95 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 
Number 

Document 

Exhibit 
Number 

10.27+  Amended and Restated Management 

10.3 

Filing 

10-Q 

Filing Date 

File No. 

Filed Herewith 

November 5, 2020 

001-34207 

Incorporated by Reference 

10.28 

Continuity and Severance Agreement, 
dated September 22, 2020, between 
Michael S. Ostrach and the Company 

Amendment No. 3 to Term Loan 
Agreement and Fee Letter, dated 
November 2, 2020, by and among 
Company, CRG Partners III L.P., CRG 
Partners III-Parallel Fund “A” L.P. and 
CRG Servicing LLC 

10.29 

Sales Agreement, dated August 6, 2020, 
between the Company and Cowen and 
Company, LLC 

10.4 

10-Q 

November 5, 2020 

001-34207 

10.3 

10-Q 

August 6, 2020 

001-34207 

10.30+  Dynavax Technologies Corporation 2021 

10.1 

8-K 

January 12, 2021 

001-34207 

Inducement Award Plan, Form of Stock 
Option Grant Notice, Option Agreement, 
Form of Restricted Stock Grant Notice 
and Restricted Stock Unit Award 
Agreement. 

10.31^  Agreement, dated January 29, 2021 
between Company and Coalition for 
Epidemic Preparedness Innovations 

10.32 

Amendment No. 4 to Term Loan 
Agreement and Fee Letter, dated January 
29, 2021, by and among Company, CRG 
Partners III L.P., CRG Partners III-
Parallel Fund “A” L.P. and CRG 
Servicing LLC 

10.33+  Kelly MacDonald Employment Letter 

21.1 

23.1 

31.1 

31.2 

32.1* 

32.2* 

List of Subsidiaries  

Consent of Independent Registered 
Public Accounting Firm  

Certification of Chief Executive Officer 
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 

Certification of Principal Financial 
Officer pursuant to Section 302 of the 
Sarbanes-Oxley Act of 2002 

Certification of Chief Executive Officer 
to Section 906 of the Sarbanes-Oxley 
Act of 2002 

Certification of Principal Financial 
Officer pursuant to Section 906 of the 
Sarbanes-Oxley Act of 2002 

X 

X 

X 

X 

X 

X 

X 

X 

X 

EX—101.INS 

  Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its 

XBRL tags are embedded within the Inline XBRL document. 

EX—101.SCH 
EX—101.CAL 

  Inline XBRL Taxonomy Extension Schema Document 
  Inline XBRL Taxonomy Extension Calculation Linkbase Document 

96 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EX—101.DEF 
EX—101.LAB 
EX—101.PRE 
EX—104 

  Inline XBRL Taxonomy Extension Definition Linkbase 
  Inline XBRL Taxonomy Extension Labels Linkbase Document 
  Inline XBRL Taxonomy Extension Presentation Linkbase Document 
  The cover page for the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, has been 

formatted in Inline XBRL 

†  We have been granted confidential treatment with respect to certain portions of this agreement. Omitted portions have been filed 

+ 
^ 

* 

separately with the Securities and Exchange Commission.  
Indicates management contract, compensatory plan or arrangement.  
Certain portions of this exhibit (indicated by asterisks) have been omitted as the Registrant has determined that (i) the omitted 
information is not material and (ii) the omitted information would likely cause competitive harm to the Registrant if publicly 
disclosed. The Registrant agrees to furnish supplementally an unredacted copy of any exhibit to the Securities and Exchange 
Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items. 
The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K, are not deemed filed 
with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Company under 
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the 
date of this Form 10-K), irrespective of any general incorporation language contained in such filing. 

ITEM 16. 

FORM 10-K SUMMARY 

None. 

97 
 
 
  
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report 

to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Emeryville, State of California.  

SIGNATURES  

Date: February 25, 2021  

Date: February 25, 2021 

Date: February 25, 2021 

DYNAVAX TECHNOLOGIES CORPORATION 
/s/ RYAN SPENCER  
By:   
Ryan Spencer 
Chief Executive Officer 
(Principal Executive Officer) 

By:   

By:   

/s/ MICHAEL OSTRACH  
Michael Ostrach 
Chief Financial Officer 
(Principal Financial Officer) 

/s/ JUSTIN BURGESS  
Justin Burgess 
Controller 
(Principal Accounting Officer) 

98 
 
  
 
 
 
  
  
 
  
 
 
  
  
 
  
 
 
  
  
Signature 

Title 

Date 

/s/ RYAN SPENCER 
Ryan Spencer 

/s/ MICHAEL OSTRACH 
Michael Ostrach 

/s/ JUSTIN BURGESS 
Justin Burgess 

/s/ ANDREW HACK 
Andrew Hack, M.D., Ph.D. 

/s/ FRANCIS R. CANO    
Francis R. Cano, Ph.D. 

/s/ JULIE EASTLAND    
Julie Eastland 

/s/ DANIEL L. KISNER 
Daniel L. Kisner, M.D. 

/s/ BRENT MACGREGOR 
Brent MacGregor 

/s/ PETER R. PARADISO 
Peter R. Paradiso 

/s/ PEGGY V. PHILLIPS 
Peggy V. Phillips 

/s/ NATALE S. RICCIARDI 
Natale S. Ricciardi 

Chief Executive Officer 
(Principal Executive Officer) 

Chief Financial Officer 
(Principal Financial Officer) 

Controller 
(Principal Accounting Officer) 

February 25, 2021 

February 25, 2021 

February 25, 2021 

Chairman of the Board 

February 25, 2021 

Director 

Director 

Director 

Director 

Director 

Director 

Director 

February 25, 2021 

February 25, 2021 

February 25, 2021 

February 25, 2021 

February 25, 2021 

February 25, 2021 

February 25, 2021 

99 
 
  
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BOARD OF DIRECTORS

MANAGEMENT

CORPORATE HEADQUARTERS

Andrew  Hack,  M.D.,  Ph.D.
Interim Chairperson of the Board 
Managing  Director
Bain  Capital  Life  Sciences,  L.P.

Ryan Spencer
Chief Executive Officer and 
Director

David Novack
President and 
Chief Operating Officer

Kelly  MacDonald
Senior Vice President,
Chief Financial Officer 

Jeff Coon
Senior Vice President
Human Resources,
Corporate Services

Robert Janssen, M.D.
Chief Medical Officer and Senior
Vice President, Clinical 
Development, Medical and 
Regulatory Affairs

Francis  R.  Cano,  Ph.D.    
President  and  Co-Founder
Cano Biotech  Corporation

Julie Eastland
Chief Operating Officer
and C  hief Financial Officer 
ReCode  Therapeutics

Daniel  L.  Kisner,  M.D. 
Former  Partner 
Aberdare  Ventures

Brent MacGregor
Chief Executive Officer 
Medical Developments Intl. Ltd.

Peter Paradiso, Ph.D.
Former Vice President 
New Business and Scientific 
Affairs Pfizer Vaccines

Peggy V. Phillips 
Former  Chief  Operating  Officer 
Immunex  Corporation

Natale  Ricciardi 
Former  Senior  Vice  President 
Pfizer,  Inc.

Dynavax Technologies Corporation 
2100 Powell Street, Suite 900
Emeryville, California 94608
U.S.A.
Tel: 510-848-5100
Fax: 510-848-1327
E-mail: contact@dynavax.com
www.dynavax.com

EUROPEAN OPERATIONS

Dynavax GmbH
Eichsfelder Str. 11
40595 Düsseldorf
Germany
Tel: +49 (0) 211 7 58 45 0

CORPORATE COUNSEL

Cooley LLP
Palo Alto, CA

TRANSFER AGENT

Computershare Inc.
P.O. Box 43070
Providence, RI 02940-3070

or

250 Royall Street
Canton, MA 02021
Tel: 800-522-6645

TDD for Hearing Impaired:
800-231-5469
Outside of the U.S.: 201-680-6578

TDD Outside of the U.S.:
201-680-6610

www.computershare.com

INDEPENDENT REGISTERED 
PUBLIC ACCOUNTING FIRM

Ernst & Young LLP
San Francisco, CA

STOCK INFORMATION

The common stock of the company is 
traded on the NASDAQ Capital 
Market under the symbol DVAX