Dendreon: The Median Is Not The Average

| About: Dendreon Corporation (DNDN)

Dendreon's (NASDAQ:DNDN) drug Provenge used to treat advanced prostate cancer may work better than its competitors over a period of time. It is not easy to measure efficacy between immunological drugs and other drugs. Immunological drugs such as Provenge are autologous. The body's immune system is ignited to kill prostate cancer cells and works for a lifetime. This fact alone makes comparison between Provenge and other drugs difficult.

The traditional way to measure efficacy for cancer drugs has been the overall survival median, which is the midpoint in a frequency distribution, in this case the number of deaths occurring in a medical trial. Investors have often confused the median with the arithmetic average, which measures the entire frequency distribution. They do not account for patients living beyond the median. If the distribution is normal, then the median and the average are the same. However, there is good reason to believe that autologous drugs do not have normal curves. What is on the other side of the median may be quite different, and that fact makes comparisons with other drugs difficult.

The FDA in April 2010 approved Provenge with a 4.1 month median for survival benefit. Later the FDA approved Zytiga with a 4.5 month median and then recently approved Xtandi with a 4.8 month median. Both Zytiga and Xtandi have considerable side effects, while Provenge has only minimal side effects. It's noteworthy that the median differences are not great, less than a month in each case.

As we know in the IMPACT trial and earlier trials, Provenge takes about 3 months before the body makes significant progress fighting cancer cells. Competitors like Zytiga and Xtandi begin working immediately and thus generate a median that has a head start on Provenge. Since Provenge keeps on working after the trial is over with no more infusions, those patients living beyond the median have better survival chances. According to the results in the IMPACT trial, patients increase their chances by 38% for living three years or more. Those critics who say Provenge only extends life by a couple of months overlook this fact.

A more important factor that is confusing the measurement of efficacy may be the design of the IMPACT trial and previous trials for Provenge. The FDA required a placebo, against which the efficacy of Provenge could be measured. An infusion of Frovenge, frozen Provenge, was used as a placebo to duplicate the process of taking white blood cells out of the trial patients and then infusing a tailored made batch of Frovenge back into the body. A study in a 2011 ASCO poster presentation showed that the IMPACT trial had understated the survival median by using Frovenge. This study estimated the true median may be as much as 12 months and significantly greater than the survival medians for Zytiga and Xtandi.

In Seeking Alpha on October 2, 2012, Theodore Cohen wrote in detail that the measurement of Provenge's survival median may be greater than the initial trials due to the use of Frovenge as the placebo.

It is no wonder the medical establishment is confused when comparing the efficacy of Provenge with its competitors. Doctors do not like to violate FDA traditions and take the median measurements seriously. In this case, one should question comparing the median of an autologous drug with medians of standard drugs. However, recent surveys of doctor opinions are becoming favorable towards using Provenge, but there is a lot of disinformation in the marketplace. It was difficult at first getting insurance reimbursements and overcoming resistance to a revolutionary therapy. All of this is changing. Medicare and most major insurance companies cover Provenge. Doctors are becoming more familiar with the infusion process done over a four-week period.

Dendreon's revenues for 4Q2012 were $81.6 million and about 5% greater than the comparable fourth quarter. Some would argue that we need a triple digit revenue number to get a serious DNDN rally going. While that may be the hard reality for a stock beaten up over the last two years, Provenge prescriptions should be steadily rising during the year. The idea of sequencing Provenge first may become the accepted method of treatment. Results from a clinical trial sequencing Provenge first and then Zytiga should be released this year. The fact that side effects occur only during the transfusion process and are minimal compared to the competition is a strong selling point.

In spite of rigid survival median measurements, Provenge may yet become the foundation for treating this deadly disease. Doctors as well as patients are really interested in the average, a measure of total efficacy, not just the median.

Disclosure: I am long DNDN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.