Deep Track Capital Responds to ISS Proxy Advisory Recommendation

05/23/2025 – 06:12 PM

Deep Track Capital Rebukes ISS Report on Dynavax Governance, Calls for Boardroom Shakeup

GREENWICH, Conn.–(BUSINESS WIRE)–Deep Track Capital, LP, a top shareholder of Dynavax Technologies Corporation (NASDAQ: DVAX) with a 14.82% stake, has issued a sharp critique of Institutional Shareholder Services’ (ISS) recent report endorsing the biotech firm’s current board ahead of its 2025 Annual Meeting. The investment firm argues ISS overlooked critical operational and governance failures while dismissing the need for fresh perspectives.

“ISS’s analysis reads like a rushed endorsement of the status quo,” Deep Track stated. “Key issues—including Heplisav’s stagnant market share, missed revenue targets, and a concerning capital allocation strategy—were either downplayed or omitted entirely. The board’s reluctance to address governance flaws and its dismissiveness toward shareholder input demand urgent change.”

Core Concerns Highlighted by Deep Track:

1. Performance Shortfalls: Heplisav, Dynavax’s flagship hepatitis B vaccine, fell short of its 2024 market share target (44% vs. 47%) and missed the $275 million annual sales goal. Despite Q1 2025 market share slipping to 43%, management has defended its strategy as “on track”—a stance ISS neglected to challenge.
2. Governance Gaps: ISS acknowledged “suboptimal governance provisions” yet ignored structural imbalances, including a staggered board structure extending through 2028. Recent board appointees lack vaccine commercialization expertise, while Deep Track’s proposed candidate with 20+ years in the field was allegedly overlooked.
3. Market Skepticism: Dynavax shares dropped 11% post-Q1 earnings, reflecting investor unease. ISS downplayed concerns about the company’s idle cash reserves, despite Deep Track’s push for shareholder returns over risky acquisitions.
4. TSR Underperformance: Dynavax’s total shareholder return lagged the Nasdaq Biotech Index by 40 percentage points in the compensation benchmarking period. Year-to-date shares have declined 23%.
5. Inaccurate Settlement Portrayal: ISS mischaracterized negotiations, omitting Deep Track’s proposed two-year standstill agreement and board rebalancing terms.

“ISS’s flawed analysis risks perpetuating a cycle of underperformance,” Deep Track asserted. “Our nominees bring vaccine commercialization expertise and capital discipline to reignite value creation.” The firm urges shareholders to support its four director candidates.

Proxy Battle Context

The dispute highlights growing tensions between Dynavax and activist investors as the company transitions from pandemic-driven revenues to sustainable growth. Deep Track’s push comes amid broader sector scrutiny of biotech governance and capital deployment.

Forward-looking statements in this release reflect Deep Track’s views, not guarantees of future outcomes. Full proxy materials are available via the SEC or Innisfree M&A Incorporated, Deep Track’s solicitor.

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