Seven days ago, I wrote about a large drop in the share price of Dynavax on unusually large volume. I suggested that such large volume is likely coming from and individual or small group of individuals, a financial institution, or a combination of both. I warned that,
“…people or institutions that hold large positions in stocks tend to get information sooner than the public does. Of course, insider trading is illegal, but if you are naive enough to believe that it doesn’t happen on Wall Street, you don’t need to be trading.”
Well, lo and behold, only five days after I posted this, Dynavax made public that it was withdrawing its application to get Heplisav approved in Europe.
So did the seller from Feb. 13 know about the news about Europe? In my opinion, probably. Is there any way to prove insider trading? Not likely. Will the S.E.C. investigate the issue? Most certainly not. And so it goes in the world of Wall Street. Is this kind of thing fair? Absolutely not. But it comes with the territory, and small traders such as myself can’t afford to lose too much sleep over it.
As far as Dynavax is concerned, the success of the company in the long run still hinges on the results of the next set of safety trials for Heplisav. It certainly would have been nice to get Heplisav approved in Europe, but if it is eventually approved in the U.S., Europe will likely follow suit at some point down the line. As for me, I’m still holding my DVAX shares.
If you want a little extra reading material on Dynavax, Leo Sun at the Motley Fool wrote a nice article a couple of days ago about the biotech sector, including an argument for why DVAX has huge upside potential and very little downside risk at the moment. I recommend you check it out.