Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Dendreon Wins Medicare Ruling

By

Fears that the government health plan wouldn't reimburse for the prostate cancer treatment Provenge weighed on the stock.

PrintPRINT
A Medicare review of the prostate cancer vaccine Provenge weighed heavily on Dendreon's (DNDN) stock since last summer.

Now that the agency overseeing the government health plan decided that Provenge is worth reimbursing, the stock should start heading higher, analysts say.

"We sensed a high degree of investor anxiety around this event," Robert W. Baird analyst Christopher Raymond says. "As a result, an important overhang has now been removed."

The positive ruling from Centers for Medicare and Medicaid Services late Wednesday afternoon is actually a preliminary decision. A final ruling will be issued by June 30. But the draft was positive, saying Provenge "improves health outcomes for Medicare beneficiaries" with advanced stages of prostate cancer and "is reasonable and necessary for that indication."

Shares of Dendreon rose 4% to $36.95 in pre-market trading. Raymond recommends buying the stock and sets a price target of $56 a share.

Provenge is a vaccine that works by triggering the body's immune system to attack cancer cells. The company's research shows that the vaccine extended the lives of patients with advanced prostate cancer by an average of four months. Priced at $93,000 for a course of treatment, Provenge is expected to become a blockbuster product and Dendreon doesn't have to share revenue with another company because it developed the product without the help of a partner. While other companies are developing treatments -- active immunotherapies -- that work the same way against cancer, Provenge hit the market first. (See Bristol-Myers' Skin Cancer Drug Gets FDA Nod.)

One of the things the Medicare officials will assess between now and June are public comments. The agency is initiation a second comment period following yesterday's initial decision. An earlier comment period produced overwhelming support for Provenge. Of 657 comments submitted to the agency, more than 94% supported Medicare coverage of Provenge.

Dendreon also benefited by winning over a panel of Medicare advisers in November. The panel recommended paying for the treatment. (See Dendreon Passes Medicare Test.)

Medicare reimbursement is critical for such a treatment -- most of the patients would eligible for the government health plan. Private insurers also look to Medicare to determine their own reimbursement policies.

From a broader standpoint, a negative decision would have sent a message to drug and biotech investors that even after companies win approval for sale of promising treatments, insurance coverage will be a serious hurdle.

In the end, the Provenge review "was not a signal of a sweeping change in the reimbursement environment," Leerink Swann analyst Howard Liang says. He also recommends buying Dendreon with a price target of $55.


Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE