Deep Track Capital Comments on ISS Recommendation

Deep Track Capital, a 14.82% shareholder of Dynavax Technologies (DVAX), is publicly disputing a recent ISS report regarding the election of directors at the upcoming 2025 annual meeting, arguing that ISS failed to recommend boardroom changes despite Dynavax's underperformance, including Heplisav's market share falling short of targets and suboptimal corporate governance. Deep Track highlights a 43% decline in Dynavax's total shareholder return since the appointment of the current Board Chair and urges shareholders to vote for its four director nominees, citing their relevant experience to improve the Board's strategic direction.

Analysis

Deep Track Capital, a significant 14.82% shareholder in Dynavax Technologies (DVAX), is publicly contesting an Institutional Shareholder Services (ISS) report and advocating for considerable board changes at Dynavax's 2025 Annual Meeting, citing underperformance and governance deficiencies. Deep Track highlights that Heplisav’s market share reached 44% at the end of 2024, falling short of the 47% target set by the board, and further reported 43% in Q1 2025, while annual sales also missed a $275 million goal. The activist criticizes Dynavax management's stated comfort with these results and points to several governance issues, including imbalanced director classes, a classified board structure extending to 2028, and recent director appointments lacking vaccine commercialization expertise despite Heplisav's market share stagnation. Deep Track also questions Dynavax's capital allocation, noting a substantial cash position and suggesting potential for increased shareholder returns. The investor underscores Dynavax's negative stock performance, including an 11% share price decline after Q1 2025 earnings, a 23% year-to-date fall, a 43% total shareholder return (TSR) decrease between October 2021 and October 2024, and a 40 percentage point underperformance against the Nasdaq Biotech Index, its management compensation benchmark. Deep Track contends that ISS's report was flawed and failed to properly scrutinize the board or accurately represent settlement discussions, where Deep Track proposed specific board appointments, an increased share repurchase program, and a standstill agreement.

Key Decisions for Investors

• Investors should closely monitor the unfolding proxy contest involving Deep Track Capital and Dynavax's incumbent board, paying particular attention to further communications and the ISS final recommendation as the 2025 Annual Meeting approaches.
• A critical reassessment of Dynavax's commercial strategy for Heplisav, its corporate governance practices, and its capital deployment plans is advisable in light of the specific performance metrics and concerns articulated by the activist shareholder.
• Consider the potential impact of the proposed board director changes on Dynavax's strategic direction, operational execution, and ultimately shareholder value, especially regarding vaccine commercialization expertise and capital return policies.
• Anticipate heightened volatility in DVAX share price and trading volume as the activist campaign progresses and the date of the annual meeting nears.