With existing resources concentrated on late-stage development of two lead products, Dynavax Technologies Corp. entered a $50 million financing arrangement with Symphony Capital Partners LP to support work on its second-generation programs in cancer, hepatitis B and hepatitis C.

Dynavax will license intellectual property relating to those programs to Symphony Dynamo Inc., a separate entity that will be capitalized by the private equity fund and its co-investors, with $20 million allocated initially and the additional $30 million coming within one year following the close of the transaction. Dynavax will retain an exclusive option to reacquire the programs at specified points during the five-year period of the agreement for further development and potential collaboration.

The deal "allows us to dramatically accelerate programs that have great promise," in a way that is non-dilutive to shareholders, said Dino Dina, president and CEO of Berkeley, Calif.-based Dynavax.

The company will issue to Symphony Dynamo investors warrants to purchase 2 million shares of its common stock at $7.32 per share, marking a 25 percent premium over the recent 60-day trading average of $5.86. If Dynavax decides to repurchase any or all of the programs, it will pay a purchase price, either in cash or a cash and stock combination, based on a compounded annual rate of return of 27 percent.

"But Dynavax has no obligation to buy the technology back," Dina told BioWorld Today. "So the entire risk of the outcome - whether clinical trials will yield useful results and be successful - is borne by [Symphony] investors."

Although the company would have to buy back any property at an increased price, it doesn't have to "trade away rights and downstream revenues to potential partners," he added. "So we retain full ownership, but do not incur any of the risk."

This type of financing vehicle has been attractive to several other companies, as well. Two firms have signed similar deals with Symphony within the past year, including Carlsbad, Calif.-based Isis Pharmaceuticals Inc., which signed an agreement last week for $75 million to develop its cholesterol-lowering drug, ISIS 301012, and two candidates from its metabolic disease program. (See BioWorld Today, April 11, 2006.)

Last June, Exelixis Inc., of South San Francisco, signed with Symphony to receive $40 million in funding, with an option for up to $40 million more within a year of closing. Those funds are being used to develop two Exelixis products in cancer and one in renal disease. (See BioWorld Today, June 14, 2005.)

Dynavax's arrangement with Symphony will focus on developing three second-generation programs emerging from its platform of Toll-like receptor 9 agonists aimed at interacting with immunostimulatory sequences to enhance immune response.

The first involves the use of TLR9 agonist molecules in various solid tumors. The company has an ongoing Phase IIa trial of its drug candidate in combination with Rituxan (rituximab) in patients with non-Hodgkin's lymphoma. Preliminary findings from that study are expected by the end of the year.

Dina said the company also plans to begin trials in other cancer indications by year's end.

Both the hepatitis B and hepatitis C programs are in preclinical development, and Dynavax is anticipating entering the clinic with the candidates in 2007. Both are TLR9 agonists designed to work by generating specific immunity.

Development plans for those programs will be in the hands of Dynavax, with support from RRD International LLC, Symphony's clinical development partner.

Dina will sit on Symphony Dynamo's board, which also will include Harri Taranto and Mark Kessel, both from Symphony, along with Ann Arvin, from the Stanford University School of Medicine.

The benefit of "putting this money into our preclinical and early clinical pipeline" is that it puts the company in a better position to attract partners, Dina said, adding that the Dynavax is "contemplating partnering any or all of these programs."

Another benefit "of course, is that it will allow us to focus our existing capital and resources on the key programs and keep moving them forward," he said, referring to the company's lead candidates, Tolamba, a ragweed allergy immunotherapeutic, and Heplisav, a vaccine for hepatitis B.

Tolamba is expected to begin a large-scale study "in the near future," Dina said. The product has completed a Phase II/III trial and is in a supportive trial in children with ragweed allergies.

Heplisav is in an ongoing Phase III study, and "we're planning to add some significant trials to our hepatitis B program to complete a registration package over the next 15 months," he said.

The company, which reported a net loss of $8.8 million for the fourth quarter, ended 2005 with cash, cash equivalents and marketable securities totaling $75.1 million.

Shares of Dynavax (NASDAQ:DVAX) gained 61 cents Thursday, or 12.4 percent, to close at $5.55.