Issue #24

💊 2 Biotech Stocks Actually Making Money — And What’s Next

While much of the biotech sector remains driven by speculation and early-stage R&D, two commercial-stage players—Dynavax Technologies (NASDAQ: DVAX) and Esperion Therapeutics (NASDAQ: ESPR)—are proving that execution and profitability still matter.

Dynavax Technologies continues to dominate the adult hepatitis B vaccine market with its best-in-class HEPLISAV-B, while expanding its pipeline with a promising shingles vaccine (Z-1018) that could become its next major growth driver. With consistent profits and strong analyst backing, DVAX is establishing itself as a reliable, cash-generating biotech.

Esperion Therapeutics, meanwhile, is emerging as a turnaround story. After years of struggle, its cholesterol-lowering drugs NEXLETOL and NEXLIZET are delivering double-digit revenue growth and the company just posted its first quarter of operating income. With major global approvals and a path to full profitability by early 2026, ESPR’s story is shifting from survival to momentum.

Together, DVAX and ESPR represent a new generation of biotechs built on real revenue, growing margins, and breakthrough science—a refreshing contrast to the speculative hype dominating the space.

Dynavax Technologies (NASDAQ:DVAX)

Dynavax Technologies (NASDAQ: DVAX) is a commercial-stage biopharmaceutical company specializing in the development and commercialization of innovative vaccines. Its success is currently driven by its proprietary adjuvant technology, CpG 1018, which enhances the body’s immune response to vaccines, making them potentially more effective and requiring fewer doses.

Business Model and Revenue Streams 📦

Dynavax’s business model is concentrated on two primary revenue drivers: the sale of its flagship commercial vaccine, HEPLISAV-B, and the licensing of its CpG 1018 adjuvant technology.

HEPLISAV-B is the main revenue engine, approved for the prevention of hepatitis B infection in adults. The business strategy here is simple: capture market share in the lucrative U.S. adult hepatitis B vaccine market, primarily by emphasizing the product’s superior two-dose, one-month regimen compared to traditional three-dose, six-month schedules. By Q2 2025, HEPLISAV-B had captured approximately 45% of the total U.S. adult hepatitis B market share, demonstrating strong commercial execution.

The second revenue stream is generated through strategic partnerships where Dynavax supplies its CpG 1018 adjuvant for use in external vaccine programs, including those targeting COVID-19 and plague. While this segment offers diversification and validates their core technology, the vast majority of revenue remains concentrated on HEPLISAV-B sales.

Macroeconomic Impact: As a commercial vaccine company focused on infectious disease prevention, Dynavax is moderately insulated from typical economic downturns, as healthcare spending on essential vaccines remains relatively stable. However, macroeconomic policies indirectly affect the company via:

• Healthcare Reimbursement: Changes in U.S. health policy, particularly around coverage and reimbursement rates for adult preventative care, can impact vaccine uptake and pricing.
• Regulatory Scrutiny: Heightened regulatory and public scrutiny around vaccine mandates or access, although often focused on childhood immunization, can occasionally introduce broad market uncertainties that affect investor sentiment toward all vaccine manufacturers.

Recent Performance and Corporate Developments 📈

Dynavax has demonstrated robust operational and financial performance, largely due to the continued market penetration of HEPLISAV-B and disciplined expense management.

Q2 2025 Financial Highlights 💰

The company reported strong results for the second quarter of 2025, exceeding analyst expectations and achieving record performance for its core product.

• HEPLISAV-B Net Product Revenue: $91.9 million, representing a increase year-over-year.
• Total Revenue: $95.4 million, marking a increase year-over-year.
• GAAP Net Income: $18.7 million, an increase of (from $11.4M in Q2 2024).
• Adjusted EBITDA: $37.3 million, up (from $20.5M in Q2 2024).
• EPS (GAAP Diluted): $0.14 per share, which beat the analyst consensus estimate of per share.

The company also refined its full-year 2025 HEPLISAV-B net product revenue guidance to a tighter range of $315 million to $325 million, indicating confidence in continued market growth.

Strategic Initiatives and Mergers 🤝

Dynavax's primary strategic focus has been advancing its pipeline leveraging the CpG 1018 adjuvant.

• Shingles Vaccine Candidate (Z-1018): In August 2025, Dynavax announced positive topline Phase 1/2 results for Z-1018, its investigational shingles vaccine. The results supported a potentially "best-in-class" profile, showing robust immune responses and a favorable tolerability profile compared to the existing market leader, which is a major potential catalyst for the company's long-term growth and diversification.
• Share Repurchase: The company completed a $200 million share repurchase program by June 30, 2025, returning value to shareholders and utilizing its strong cash position.
• Pipeline Expansion: New programs in pandemic influenza and Lyme disease are planned to enter clinical development in 2025 and 2027, respectively, further leveraging the CpG 1018 technology.
• No Recent Mergers: There have been no major mergers or acquisitions in the recent past; growth has been purely organic through commercial execution and pipeline development.

Path to Profitability and Fair Value 🎯

Dynavax has already established GAAP profitability, reporting a net income of $18.7 million in Q2 2025. Its path to sustained and growing profitability is centered on the following:

1. HEPLISAV-B Scale: Continuing to increase the U.S. market share for HEPLISAV-B toward the company's long-term goal of 60% or more, maximizing the operating leverage of its existing commercial infrastructure.
2. Pipeline Success: Successful development and commercialization of the Z-1018 shingles vaccine, which would significantly diversify revenue away from HEPLISAV-B and tap into another major adult vaccine market.

Fair Value Assessment: Given its commercial success and promising late-stage pipeline, Dynavax is often viewed as potentially undervalued. While biotechs can be challenging to value using traditional metrics like trailing P/E due to R&D investment, the strong cash flow and market dominance of HEPLISAV-B provide a solid floor. The significant potential upside hinges on the successful progression of Z-1018, which could unlock substantial future revenue.

Analyst Estimates and Ratings 📊

Consensus Rating: Dynavax currently holds a generally optimistic consensus rating. A recent snapshot shows a majority of analysts maintaining Buy or Strong Buy recommendations.

Recent Analyst Activity (Last 30 Days): The request specifically noted that DVAX has received multiple buy ratings recently. While specific ratings in the last 30 days are limited to a small number of firms, the overall sentiment remains highly positive. For instance, JMP Securities has maintained an "Outperform" rating, and multiple firms are leaning towards Buy/Strong Buy.

Price Target: The average 12-month price target from analysts is robustly high, typically ranging around $22.67 to $24.48. Considering the stock often trades around the $10.00 to $11.00 range (as of early October 2025), this average target suggests a substantial potential upside of over . The wide range (from a low of approximately $11.00 to a high of up to $33.60) reflects the high-risk, high-reward nature of biotech valuation, where pipeline success can dramatically alter projections.

Investor-Focused Takeaway: Is DVAX Right for Your Portfolio?

Dynavax is an attractive stock for investors seeking exposure to a profitable, commercial-stage biotech with clear catalysts for future growth. The company has moved past the volatile development stage and is generating significant cash flow, primarily driven by the market-leading performance of HEPLISAV-B.

What to Watch in the Near Term 📈

• Q3 2025 Earnings: The next earnings report (expected in early November 2025) will confirm whether the Q2 momentum for HEPLISAV-B continued through the third quarter.
• Shingles Vaccine Progress: Watch for the initiation of the next phase of clinical trials for Z-1018. Any positive news or updates here will likely be a major stock driver.
• Market Share Penetration: Monitor HEPLISAV-B’s continued ability to gain market share in the adult hepatitis B space, moving closer to the 60% goal.

Recommendation

Dynavax (DVAX) is currently positioned as a Strong Buy based on its profitable commercial engine (HEPLISAV-B), substantial cash position, and the high-value potential of its pipeline, particularly the Z-1018 shingles vaccine. The strong analyst consensus and aggressive price targets indicate that the market views this stock as having a significant runway for growth, despite the inherent execution risks associated with any clinical-stage asset.

Esperion Therapeutics (NASDAQ:ESPR)

Onto Innovation Inc. (ONTO) is a critical supplier in the semiconductor manufacturing ecosystem, focusing on process control, metrology, and inspection solutions. The company was formed in 2019 through the merger of Nanometrics and Rudolph Technologies and now provides tools and software that enable chipmakers to monitor, control, and ensure the quality of every step in the semiconductor fabrication process. Their technology is indispensable for achieving high yields and performance in the most advanced chips, particularly those fueling the AI and High-Performance Computing (HPC) revolution.

Business Model and Revenue Streams

ONTO's business model is centered on selling highly complex, proprietary equipment and software required for advanced chip manufacturing. The value proposition is to provide solutions that manage process variation and defectivity, which become exponentially harder to control with shrinking chip geometries.

Onto Innovation’s revenue streams are strategically balanced across the semiconductor value chain:

• System & Software Sales (Primary Revenue): This includes the sale of advanced inspection and metrology tools—such as the Dragonfly inspection system and the new OCD (Optical Critical Dimension) Metrology platforms. These tools are crucial for both the front-end (wafer fabrication) and back-end (advanced packaging) stages of chip production.
• Specialty Devices & Advanced Packaging: This segment has been a major growth driver, with its revenue share increasing significantly, driven by strong demand from customers in AI packaging (where revenue grew 180% over 2023) and power semiconductor applications.
• Service and Parts Revenue: A consistent, high-margin revenue stream is generated through long-term service contracts, spare parts, and software subscriptions, capitalizing on its large, global installed base of over 9,000 active tools.

Macroeconomic Impact Analysis 🌍

ONTO's performance is closely tied to the capital expenditure (CapEx) decisions of major global chipmakers, particularly due to its international revenue exposure.

• The AI Capital Cycle: ONTO is a direct beneficiary of the massive CapEx shift toward AI and HPC infrastructure. The complexity and performance demands of AI chips (especially High Bandwidth Memory or HBM) necessitate extremely tight process control and advanced packaging, which directly translates into demand for ONTO's high-margin metrology and inspection tools.
• The Industry Downturn: The broader macroeconomic slowdown and the resulting inventory correction in the logic and memory markets have led to a moderation in total wafer fabrication equipment (WFE) CapEx. This is visible in ONTO's guidance, which anticipates a near-term sequential dip in revenue (Q3 2025).
• Geopolitical and Global Risk: As a global supplier, with major revenue contributions from South Korea (around 35%) and Taiwan, ONTO is exposed to geopolitical risks and trade fluctuations. However, its balanced exposure across the entire value chain (advanced nodes, packaging, specialty devices) has historically allowed it to outperform the broader WFE market during downturns.

Recent Performance and Corporate Developments 📈

Onto Innovation has consistently delivered financial results at the high end of its guidance ranges, underscoring strong execution and demand in its strategic markets.

Recent Financial Highlights (Q3 2024 and Q4 2024): 💰

ONTO has successfully executed during a period of market volatility, setting new operational records:

• Q4 2024 Results: The company reported a record quarter with revenue of $264 million and Non-GAAP Diluted Earnings Per Share (EPS) of $1.51, exceeding the high end of its guidance range.
• Q3 2024 Results: Revenue reached $252 million, and Non-GAAP EPS was $1.34, both near the high end of its guidance. This quarter set a new record for inspection revenue, driven by the strong adoption of the Dragonfly platform.
• Full-Year 2024: Total revenue was $987 million (up 21% YoY). Non-GAAP EPS was $5.34 (up 43% YoY), driven by significant margin expansion and operational efficiency.
• Record Cash Generation: ONTO generated a record $246 million in cash from operations in 2024, representing 25% of revenue and a more than doubling of operating cash flow YoY in Q3 2024.

Strategic Initiatives and Mergers: 🤝

• Acquisition of Semi Lab Lines: In August 2025, ONTO announced the strategic acquisition of certain Semi Lab product lines for $475 million. This is a major development, expected to be immediately accretive to margins and EPS. Management projects this small, tuck-in acquisition to generate up to $100 million in annual revenue in the next three years, strengthening its position in metrology.
• New Product Launches: ONTO continues to launch new technology, including a next-generation OCD Metrology Platform to support the complex process control demands of next-gen AI devices and gate-all-around (GAA) investments in advanced nodes. This is crucial for securing market share in future technology transitions.

Path to Profitability and Fair Value 🎯

ONTO is already a highly profitable and cash-generative company, and its focus is on extending its operational leverage and gaining market share in its high-growth niches.

Path to Sustained Growth and Profitability

• Advanced Packaging Dominance: The company's successful penetration of the advanced packaging market, particularly its exposure to AI and HBM manufacturers, provides a structural tailwind that insulates it from the volatility of traditional logic and memory cycles.
• R&D Acceleration: Management is strategically accelerating R&D investments to expand capabilities in integrated and 3D metrology, which is critical for the next wave of advanced chip architectures (like GAA).
• Balance Sheet Strength: The company boasts a pristine balance sheet, providing the flexibility to fund organic R&D and execute strategic, accretive acquisitions like the recent Semi Lab deal.

Fair Price Analysis

• Discounted Valuation: ONTO’s current valuation metrics (P/E of ≈24.35x) are competitive and, by some measures, slightly undervalued compared to the broader US Semiconductor industry average (P/E ≈38x).
• DCF Fair Value: Discounted Cash Flow (DCF) models often indicate a fair value slightly above its current price (e.g., a $150.54 estimate vs. a current price of ≈$139.12), suggesting a modest underlying discount.
• Analyst Price Target: The average 12-month analyst price target is $136.25, though the range is wide (from $110.00 to $170.00), reflecting short-term cyclical uncertainty. The average target is currently slightly below the stock price, suggesting that much of the optimism has already been priced in.

Analyst Estimates and Ratings 📊

• Consensus Rating: The consensus rating from analysts is a strong "Buy" (specifically, an Average Brokerage Recommendation of 1.78 on a 5-point scale).
• Recent Momentum: Sentiment has improved recently, with the number of "Strong Buy" ratings increasing in the last month (from 4 to 5), indicating growing conviction that the cyclical downturn is manageable and that the long-term AI tailwind is dominant.

Investor-Focused Takeaway: Is ONTO Right for Your Portfolio?

Onto Innovation is a compelling investment for those seeking exposure to the AI and Advanced Packaging mega-trends through a high-margin, process control specialist. The company's ability to maintain strong profitability and cash flow, even during WFE softness, highlights its indispensable role in the chip ecosystem.

What to Watch in the Near Term: 📈

• Q3 2025 Performance: Monitor the revenue and EPS guidance for Q3 2025, which anticipates a near-term dip before the expected Q4 rebound, led by a projected 50% sequential increase in AI logic packaging revenue.
• Acquisition Integration: Track the integration of the Semi Lab product lines and whether they deliver the promised margin and revenue accretion.
• HBM and GAA Investments: Look for continued CapEx announcements from major foundry customers regarding HBM and next-gen Gate-All-Around (GAA) logic, which are direct demand drivers for ONTO.

Recommendation:

ONTO is viewed as a Strong Buy for long-term growth investors. The stock is a high-quality "picks and shovels" play for the AI boom, offering a superior balance of growth, profitability, and cyclical resilience compared to many peers. The strong recent analyst momentum suggests the market is increasingly confident in the company's long-term outlook.

🔬 Final Take: Two Biotechs Built on Real Revenue

While biotech headlines often focus on speculative pipelines and clinical volatility, Dynavax (DVAX) and Esperion (ESPR) are rewriting the script with strong commercial execution, real product sales, and a clear path to growing profitability.

These aren’t moonshot ideas — they’re biotech businesses backed by growing revenue and analyst conviction.

🧪 Dynavax (DVAX) – From Vaccine Specialist to Vaccine Powerhouse
✔ 45%+ market share in U.S. adult hepatitis B market
✔ Profitable with $18.7M net income and 39% EBITDA margin in Q2 2025
✔ Next-gen shingles vaccine (Z-1018) could unlock a multi-billion-dollar market
➤ Best for: Long-term investors seeking a stable, cash-generating biotech with upside from pipeline execution

❤️ Esperion (ESPR) – A Cholesterol Challenger With Real Momentum
✔ Q2 2025 marked its first operating income milestone
✔ NEXLETOL/NEXLIZET sales up 42% YoY; Japan launch adds royalty upside
✔ Set for GAAP profitability by Q1 2026
➤ Best for: Risk-tolerant investors looking for a turnaround story with large upside and near-term catalysts

Investor Insight:

💉 Want stable growth from a profitable vaccine platform? → DVAX
​ ❤️ Want deep value from a cardiovascular drug ramping up? → ESPR

Both companies show that profitable biotech is back in focus—and these two tickers may just be at the start of their next leg higher.

We’ll be back with our next report soon, bringing you fresh insights on the market and new opportunities to watch. In the meantime, we’d love to hear from you—let us know how you found this report, what niche sectors you’d like us to cover next, and don’t forget to share your top stock holdings with us. Your feedback helps us deliver reports that matter most to your investing journey.

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Happy Trading
​— Team Premium Stock Alerts