Dendreon Picking Up Momentum for New Phase
With its potential market impact, both bulls and bears will tune in tomorrow.
Dendreon (DNDN) has been one of the better-performing stocks in 2009, up over 500% on the strength of positive results from the IMPACT trial of Provenge for prostate cancer. As one of the longest-covering analysts on the company (just about 10 years now), I can say with some authority that Thursday's Analyst Day marks a significant turning point for the company.
Dendreon's lead drug is Provenge, an active immunotherapy for later-stage prostate cancer. The drug is highly likely to be approved by the FDA next year for use in men whose cancer has returned after prostate surgery, where the cancer no longer responds to hormone therapy.
The drug makes use of a man's immune system cells and trains them to attack a marker present on prostate cells. It's a first-in-class drug in the US. Data from the IMPACT pivotal trial confirmed earlier Phase III trials, showing the largest confirmed survival benefit to date by a treatment for late-stage prostate cancer.
Most importantly, Provenge confers this survival benefit without any significant side effects.
The reason Thursday's meeting is a turning point for Dendreon is because the company won't have to spend hours defending their data or making the case for why Provenge will work where all other active immunotherapies have failed prospective clinical trials. IMPACT, combined with data from two other Phase III trials, has proven the drug works. Instead, the company will be talking about where they go next.
Science geek that I am, I'll be very interested in seeing where the company will go next for their pipeline. The technology behind Provenge is true platform technology, adaptable to other tumor markers and other cancers. I want to hear how aggressively Dendreon will pursue this platform to bring the next Provenge to market.
Most people will be focused on the manufacturing and distribution plans. Having the benefit of 10 years of coverage, I'm not as interested in this aspect of the show because this was asked and answered for me long ago.
For newcomers, how Dendreon will manage getting personalized cell material from patients, to their central labs, and back efficiently is of significant concern. I expect Dendreon will spend more than a little time trying to catch up others on this aspect of their operations.
Finally, people will hope to get some idea of drug pricing and sales targets from the company. There's internal debate at my firm whether Dendreon will release these items Thursday or whether they will wait until they have approval and know precisely what the FDA gives them on the product label. So, if the presentation passes without any data on sales projections or product cost, don't be too surprised.
Dendreon has been a significant battleground stock for most of this decade -- with the heavy short selling and other games that entails. The bear crowd has never been correct on the fundamentals, though I grant they did get lucky in 2007 when the FDA -- in an unprecedented action (unprecedented = lucky) -- went against a recommendation of an advisory committee that Provenge was safe, effective, and the not-so-implicit recommendation it should be approved.
The Wall Street battle going forward will focus on distribution, sales, and reimbursement. The Boo crowd will say Dendreon won't be able to handle the logistics of shipping perishable cellular material hither, thither, and yon. Boo's crew will also say the price tag and characteristics of the drug make the billions in sales forecasted by bulls simply unreachable.
Hoofy's bulls will note the shipping logistics aren't all that different from the logistics of handling blood or blood products, which were solved a few decades ago. They'll note huge patient demand for the drug has already formed and more than 90% of all potential prescribing doctors are already aware of the drug and its survival benefit. Reasonable Hoofy disciples will acknowledge that reimbursement is always related to pricing, and will be closely watching what the company has to say on this front.
I think you can likely guess I'm with Hoofy on the fundamentals. We don't do recommendations here on the 'Ville and it's worth saying I'm the first to admit the movement of Dendreon's stock price is unpredictable at best. Even if the Analyst Day is a 110% success, it's hard to predict where the stock price will go afterward, given it's already up over 500% for the year.
Dendreon will be webcasting the Analyst Day presentation Thursday morning from NYC. If you're interested in biotech or simply want to see firsthand what the buzz is about, you should tune in.
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