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* Says FDA seeks more data to evaluate vaccine's safety
* Says FDA willing to discuss restricted approval
* Shares fall 37 pct to lowest in more than a year (Adds analysts' comments, company comments from conferencecall)
By Zeba Siddiqui
Feb 25 (Reuters) - Dynavax Technologies Inc mayneed to repitch its hepatitis B vaccine for a smaller patientpopulation, after U.S. health regulators declined to approve thevaccine for adults - an estimated $700 million global market.
The U.S. Food and Drug Administration said the safety dataprovided by the company was insufficient to support an approvalof Heplisav - Dynavax's most advanced clinical candidate.
The company said in a statement earlier on Monday that theFDA had indicated its willingness to discuss a more restricteduse of the vaccine. It said it expects to meet with the FDAwithin six weeks to discuss Heplisav's approval.
The rejection, which potentially delays the market entry ofa faster-acting and less frequently needed vaccine for theliver-attacking infection, sent the company's shares down 37percent to $1.87 on Monday, their lowest in more than a year.
However, Dynavax said on a conference call with analyststhat it may not need to conduct additional tests to assess thesafety of its vaccine.
"It isn't going to be an instantaneous turnaround. We aregoing to have to do some work to assemble all (the data) andmake sure that it fits the FDA's requirement. Let's just saywe're talking in months and not years," Tyler Martin, Dynavax'spresident and chief medical officer, told analysts on the call.
Cowen & Co analyst Phil Nadeau said the approval of Heplisavwithin a limited population may still be possible late this yearor the first half of the next year.
However, MLV & Co analyst Megan McCloskey Dow cut her ratingon Dynavax's stock to "hold" from "buy" citing uncertaintyregarding the need for additional studies for Heplisav'sapproval in the United States.
She added that Dynavax, which filed with European healthregulators last July for approval of Heplisav in adults withchronic kidney disease, may secure a nod in that region by thefirst quarter of next year.
Dynavax pitched Heplisav in the United States for use inpatients between 18 and 70 years of age, and the vaccine showedpromising efficacy in clinical studies after the administrationof just two doses.
GlaxoSmithKline Plc's Engerix B - the most widelyused hepatitis vaccine in the world - requires three or fourdoses in adults.
"There are a few possibilities - one is for adults 40 to 70years of age, because in these older adults, the immune systemis more compromised, so they benefit more from Heplisav,"William Blair & Co analyst Katherine Xu said.
The company could also explore seeking approval for at-riskhepatitis B populations such as patients with HIV, HCV, diabetesand those on dialysis, Xu added.
An estimated 3.5 million to 5.3 million people are livingwith viral hepatitis in the United States, and vaccination iscrucial as it prevents progression of the infection, which isthe leading cause of liver cancer.
SAFETY RISKS
The FDA noted that the novel adjuvants in Heplisav may causerare autoimmune events, Dynavax added.
Adjuvants are added to vaccines to improve their ability totrigger an immune response, but they carry the risk of causingseveral potentially fatal adverse reactions.
The FDA also sought clarifications on the manufacturingcontrols and facilities related to quality assurance of thecommercial product, Dynavax said on Monday.
CMO Martin said on the call that the company would have todo "some limited additional amount of work" at some of itsfacilities to provide FDA with the requested data.
The FDA echoed the concerns expressed in November by anadvisory committee that recommended against Heplisav's approvaland asked for data from a more diverse study population. Theadvisors, however, voted unanimously to support the vaccine'sefficacy.
The company is currently testing a few other clinicalcandidates in collaboration with British drug giants Glaxo andAstraZeneca Plc, including potential treatments forasthma and anti-inflammatory disorders such as rheumatoidarthritis and lupus. (Editing by Roshni Menon)
