The Dendreon saga has been the proverbial rollercoaster ride. Hailed several years ago as a breakthrough immunotherapy for prostate cancer, its Provenge vaccine seemed likely to win FDA approval five years ago until an unusual turn of events prompted the agency to issue a delay. The move was spurred by a letter sent by two FDA panelists who urged the agency to forestall approval, prompting accusations the panelists harbored undisclosed conflicts of interests (read this).
Lawsuits and protests ensued amid ongoing debate over the veracity of Provenge clinical results. Finally, though, the FDA approved Provenge two years ago and the Centers for Medicare & Medicaid Services signaled coverage would be provided (see here and here). After years of struggle, the proverbial tide appeared to have turned, but then Dendreon made some missteps - doctors were concerned about reimbursement and confusion existed about survival benefits (look here).
The setback prompted Dendreon to slash 500 jobs and eventually replace its ceo, Mitch Gold, who was widely criticized by shareholders for failing to anticipate various challenges (read here and here). But the biggest hurdle is Zytiga, a Johnson & Johnson med for prostate cancer that is approved to treat advanced prostate cancer in patients who did not benefit from chemo.
A key issue is cost comparisons: the J&J pill carries a $5,000 monthly price for post-chemo treatment and over eight cycles, this amounts to $40,000, which is less than $93,000 for Provenge. Although, a recently unblinded pre-chemo involved 14 months of treatment, pushing costs closer to $80,000. But docs must decide when patients should migrate to Zytiga.*
A key issue is cost comparisons. The J&J pill carries a $5,400 monthly price for a drug that currently is approved only post-chemo and is used for a median of eight cycles, so this amounts to about $40,000, which is less than the $93,000 for Provenge used before chemo. Although, a recently unblinded pre-chemo trial involved 14 months of treatment, pushing costs closer to $80,000. And some docs prescribe Zytiga off-label for patients who cannot tolerate chemo.
However, The Journal of Clinical Oncology (see this) recommends that if the drugs are to be sequenced, Provenge should be given first. If Zytiga is given first, docs must decide when patients should migrate to Zytiga. Meanwhile, amid sequentially lower Provenge revenue and sales force turnover, Dendreon cut another 600 jobs and closed a New Jersey facility. The moves will lower cash-flow breakeven to $100 million per quarter, or $400 million annually.
There were some positive signs amid the gloom. Dendreon announced that 115 new accounts were added during the quarter, up from 84 in the same period a year ago, which suggests that physician support is increasing and, crucially, that reimbursement issues are finally being sorted out. A key question, though, is the extent to which the sales force will focus on urologists, since they are more likely to first see Provenge candidates than oncologists.
"The bottom line: (we) like the steps management is taking, but revenue trends need to turn the corner. Although restructuring is the right move here in our view, until we see more signs of revenue reacceleration - the difficulty of which may be compounded by two potential second half 2012 approvals in the increasingly competitive prostate cancer market - we continue to prefer watching from the sidelines."
Adds Leerink Swann analyst Howard Liang: "Though some of the items, including increased turnover of the sales force, that caused the decline in revenues this quarter appeared to be one time in nature, the company may have missed an opportune time to further establish Provenge ahead of the likely competitions (Zytiga pre-chemo approval, potentially in the second half of 2012)," he writes in an investor note. "Due to the unique short treatment duration of the product, we were already concerned about growth upon arrival of competition. With inability to grow Provenge in absence of competition, the direction of the sales trajectory after Zytiga approval becomes even more doubtful."
Just the same, Dendreon execs are putting on a brave face. They just signed a new 39,937 square foot, 10-year lease through 2023 in Bridgewater, New Jersey (read this). Then again, leases can be broken.
* EDITOR'S NOTE: This paragraph was updated to reflect the recently unblinded Zytiga trial