Is It Time To Give Up On Dendreon?

May. 7.13 | About: Dendreon Corporation (DNDN)

What happened to Seattle, Washington-based Dendreon Corporation (NASDAQ:DNDN)? There was once so much optimism and excitement about this biotechnology company pioneering active cellular immunotherapy (ACI) technology to develop drugs that stimulate the immune system to attack cancer and other diseases.

Dendreon was founded in 1992 by Edgar G. Engleman, MD, and Samuel Strober, MD, based on the research they conducted at the Stanford University School of Medicine. The company was initially named Activated Cell Therapy and was based in Mountain View, California. In 1997, after obtaining $11.7 million in mezzanine financing, the company changed its name to Dendreon. In 1999, Dendreon moved to Seattle, Washington.

The company's only U.S. Food and Drug Administration (FDA) approved drug is Provenge (sipuleucel-T), a therapeutic cancer vaccine that the company touted as "an entirely new era in medicine."

Since receiving FDA approval for Provenge, Dendreon has been plagued by poor marketing, bad forecasting, reimbursement confusion and challenges, slow revenue growth, insider selling, high cash burn, shareholder class action litigation, management and board membership changes, plant closing, layoffs and corporate restructuring.

Active Cellular Immunotherapy

Dendreon's active cellular immunotherapy platform identifies and engineers antigens and cells to produce active cellular immunotherapy products, designed to stimulate a tumor-directed immune response. Dendreon believes that its proprietary technology is applicable to many antigens and may be developed to target a variety of solid tumor and blood-borne malignancies.

Provenge is designed to target the prostate cancer antigen prostatic acid phosphatase (PAP), an antigen that is expressed in more than 90% of all prostate cancers.

Dendreon's Antigen Delivery Cassette technology enhances antigen-presenting cell activation and uptake of antigen. Antigen-presenting cells process antigen along pathways that stimulate cell-mediated immunity. Dendreon believes this process results in a tumor-directed immune response. The Antigen Delivery Cassette technology also provides the company with a foundation to develop new products. The antigen in the Antigen Delivery Cassette technology and antigen-presenting cells are the two key elements in Dendreon's manufacturing process.

The company's sole drug is Provenge (sipuleucel-T). Dendreon made international news on April 29, 2010 when the U.S. Food and Drug Administration (FDA) approved Provenge as a revolutionary, new advanced prostate cancer therapy.

Advanced Prostate Cancer

The American Cancer Society estimates that approximately 238,590 new cases of prostate cancer will be diagnosed in the United States, and approximately 29,720 men will die of prostate cancer in the United States in 2013. Approximately one in six men will be diagnosed with prostate cancer during his lifetime. Prostate cancer is the second leading cause of cancer death in American men, behind lung cancer.

Approximately 5% to 10% of the men diagnosed with prostate cancer this year will have advanced disease. Although there is no cure for advanced prostate cancer, therapies are available that slow its growth. and reduce cancer related symptoms. The most common types of therapy include hormonal therapy/androgen deprivation therapy, chemotherapy and immunotherapy.

Androgen deprivation therapy (ADT) is usually the initial treatment for men with metastatic prostate cancer. Despite initial response rates of 80% to 90%, virtually all men develop progressive disease, referred to as castrate resistant prostate cancer following ADT.


Provenge is approved to treat castrate resistant prostate cancer (CRPC). CRPC is prostate cancer that continues to grow despite the suppression of male hormones that fuel the growth of prostate cancer cells.

Provenge is an autologous cellular immunotherapy, designed to stimulate a patient's own immune system to respond against the cancer. Provenge was not only a pioneer in personalized medicine, but was also the first therapeutic cancer vaccine to hit the market. Dendreon stock rose over 25% on the day of the FDA approval announcement. Some analysts predicted Provenge would be a billion dollar drug.

Although vaccines are usually used to innoculate against infections, Provenge works by boosting the body's immune system so that it can fight cancer cells. Provenge is the only personalized treatment that is clinically proven to help extend life in certain men with advanced prostate cancer.

Provenge is an immunotherapy that takes an advanced cancer patient's immune cells and reprograms them to attack the cancer in his prostate.

Provenge is expensive. The drug costs costing $31,000 per infusion. Since three infusions of the drug are administered, the cost of Provenge treatment amounts to $93,000. The cost of Provenge is high because each dose of Provenge is custom made, involving an approximate three day process. To obtain antigen-presenting cells, Dendreon arranges to have white blood cells removed from a patient's blood by using leukapheresis, a blood cell separation and collection process. Dendreon has agreements with community blood centers that offer leukapheresis services. The company has contracted with courier services that transports these cells to one of its manufacturing facilities where the cells are further processed using cell separation technology. The antigen-presenting cells are then incubated with the desired concentration of the antigen under controlled conditions. Each dose undergoes quality control testing. The product is then transported back so that it can be re-infused into the patient.

Provenge was originally submitted to the FDA for approval in 2007.On March 29, 2007, the FDA's Tissue and Gene Therapies Advisory Committee recommended to the FDA that there was substantial evidence of efficacy and safety of Provenge for the treatment of patients with asymptomatic, metastatic, androgen-independent prostate cancer. The Advisory Committee voted 17 to 0 in favor of the safety of Provenge, and 13 to 4 in favor of the efficacy of the drug. Dendreon stock skyrocketed from $5.22 a share to $12.93 a share.

Many were disappointed, shocked, and angered on May 9, 2007 when Dendreon announced that it received a Complete Response Letter (CRL) from the FDA requesting additional clinical data in support of the efficacy of Provenge. The FDA also requested additional information with respect to the chemistry, manufacturing and controls (CMC) section of the biologics license application. Dendreon submitted to the agency. Dendreon stock plummeted from $17.74 to $6.33 a share.

After the news broke that the FDA refused to approve Provenge, all hell broke loose. Physicians, caregivers, the media, FDA bureaucrats, elected officials, patient advocacy groups, statisticians, medical associations, scientists, lawyers, stock market analysts, Dendreon investors, as well as prostate cancer patients and survivors all jumped into the fracas.

Prostate cancer patients and advocacy groups organized a letter writing campaign lobbying Congress to hold hearings to investigate the FDA's action. The media interviewed desperate and dying prostate cancer patients who were disappointed and angry that the FDA had denied them the vaccine that offered them a ray of hope. Rallies were held in major cities protesting the FDA's action. Numerous blogs and websites were launched advocating for the FDA's approval of Provenge. Prostate cancer victims filed a lawsuit against the FDA alleging that the agency was a puppet of pharmaceutical industry giants and that there was a conspiracy orchestrated by top FDA officials to drive Dendreon out of business.

Oncologists who were critical of Provenge claimed that they received death threats and feared for their safety. Some even retained bodyguards. Some experts were skeptical about the efficacy of Provenge because although early studies showed a survival benefit, these trials did not demonstrate a delayed progression of cancer. Usually, both of these benefits have been necessary for a cancer treatment to receive FDA approval.

Dendreon denied that the company organized or financed any of the protests.

Provenge Receives FDA Approval

On April 29, 2010, the FDA approved Provenge for the treatment of asymptomatic or minimally symptomatic, metastatic, castrate-resistant (hormone-refractory) prostate cancer.

The pivotal study supporting FDA approval for Provenge was called IMPACT (IMmunotherapy for Prostate AdenoCarcinoma Treatment), a Phase III clinical trial comprised of 512 men with asymptomatic or minimally symptomatic, metastatic, castrate-resistant prostate cancer. The IMPACT study met its primary endpoint of overall survival. Researchers found that Provenge reduced the risk of death by 22.5% compared to control and extended median survival by 4.1 months compared to control (25.8 months versus 21.7 months).

The safety evaluation of Provenge was based on 601 prostate cancer patients in four randomized clinical trials who underwent at least one leukapheresis procedure. The most common adverse events (incidence greater-than or equal to 15%) were chills, fatigue, fever, back pain, nausea, joint ache, and headache. Serious adverse events reported in the Provenge group included acute infusion reactions (occurring within one day of infusion) and cerebrovascular events. In controlled clinical trials, severe (Grade 3) acute infusion reactions were reported in 3.5% of patients in the Provenge group. Reactions included chills, fever, fatigue, asthenia, dyspnea, hypoxia, bronchospasm, dizziness, headache, hypertension, muscle ache, nausea, and vomiting. No Grade 4 or 5 acute infusion reactions were reported in patients in the Provenge group.

After Provenge received FDA approval, investors and analysts had extremely high hopes for Dendreon.

"The FDA approval of Provenge and our rapid launch represents the beginning of an entirely new era in medicine," Mitchell H. Gold, M.D., Dendreon's President and CEO stated. "We are committed to continuing our expansion in the United States in order to serve the many patients with advanced prostate cancer who until now had few appealing treatment options. In addition, we are investing in our pipeline and establishing the infrastructure required for global growth."

Over the first three months of Provenge's launch, sales grew from $340,000 in May 2010 to $2.45 million in June and $5.2 million in July. The company claimed that it could not keep up with the demand for Provenge. Dendreon claimed it had received prescriptions for more than 500 patients during the first three months that Provenge was on the market. The company reassured analysts and investors that it was on track to provide Provenge to approximately 2,000 patients over the first 12 months of launch.

On November 3, 2010, Dendreon claimed that the company was on track to make Provenge more broadly available in 2011 with the expansion and anticipated licensure of its New Jersey facility in early 2011 and its facilities in Atlanta, Georgia and California in mid-2011.The company's revenue guidance for full year 2010 was approximately $46 million to $47 million, and $350 million to $400 million in 2011.

Provenge Net Revenue By Quarter

Q2 2010..........$2.8 Million

Q3 2010..........$20.2 million

Q4 2010..........$25 million

FY 2010..............................$48.1 million

Q1 2011..........$28.1 million

Q2 2011.........$49.6 million.

Q3 2011..........$64.3 million

Q4 2011..........$77 million

FY 2011.............................$213.5 million

Q1 2012..........$82 million

Q2 2012..........$80 million

Q3 2012..........$78 million

Q4 2012..........$85.5 million

FY 2012.............................$325.3 million

For FY 2010, Dendreon reported revenue of $48.1 million. The net loss for the year was $439.5 million.

The company received good news in March 2011 when the Centers for Medicare and Medicaid Services approved Medicare coverage for Provenge as a ''reasonable and necessary'' treatment for Medicare patients who had advanced prostate cancer. However, the agency did not believe off-label uses for the vaccine should be reimbursed as there was no evidence proving it was effective for any other disease than the FDA approved indication.

On May 2, 2011, Dendreon claimed that in addition to the $28.1 million in revenue in the first quarter, Provenge sales in April 2011 were approximately $15 million, reflecting increasing demand. Dendreon stated that it continued to expect revenue this year of between $350 million and $400 million with approximately half of that anticipated in the fourth quarter. The net loss for the first quarter of 2011 was $111.8 million.

On August 3, 2011, Dendreon shocked investors when the company withdrew its previous guidance of $350 million to $400 million in revenue for 2011 and revealed that it only expected "modest quarter over quarter revenue growth for the remainder of the year." Provenge sales during the second quarter of 2011 were also significantly lower than expected. After the news, Dendreon shares fell more than 60% reducing the company's market value by over $3 billion.

Dendreon blamed reimbursement concerns for slowing sales. The company claimed that physicians feared that private insurance companies and Medicare would balk at the high cost of Provenge, and they would not be reimbursed for the drug. The company had previously claimed Provenge sales were lagging due to manufacturing constraints.

Shortly after the August 3 announcement, class action litigation was initiated against Dendreon and several of its officers for alleged violations of federal securities laws by several law firms. The litigation alleged that Dendreon officials made materially false and misleading statements to investors by materially overstating the company's projected sales of Provenge and failing to disclose that physicians were slow to adopt the drug for fear that they would not be reimbursed for the expensive treatment. Several suits also claimed that President and CEO Mitchell Gold, and other Dendreon officials sold shares while the company's share price was artificially inflated due to the alleged misrepresentations. One suit claims Gold sold more than 128,000 Dendreon shares between January and August "to reap illicit gross proceeds of over $4.84 million." In April 2013, the U.S. Securities and Exchange Commission (SEC) initiated a civil investigation into stock trades by Gold to determine if he profited illegally from inside information.

On September 8, 2011, Dendreon announced that the company would layoff approximately 500 employees to "align with the shift in the launch trajectory" and meet the company's manufacturing requirements.

On February 1, 2012, Dendreon announced that its Board of Directors has elected John H. Johnson as President and CEO, to succeed Gold who had served in that position since January 2003.

Johnson has been a member of Dendreon's Board of Directors since August 2011 and brings to Dendreon nearly 30 years of experience in the life sciences industry, including serving as President, CEO, and director at Savient Pharmaceuticals (OTC:SVNT), president of Eli Lilly's (NYSE:LLY) Oncology Business Unit, CEO of ImClone Systems (a Lilly subsidiary), and company group chairman of Johnson & Johnson's (NYSE:JNJ) Worldwide Biopharmaceuticals.

The company endured more bad press when a controversial essay published in the February 22, 2012 issue of the Journal of National Cancer Institute questioned the 4.1-month overall survival benefit seen in men treated with Provenge in the IMPACT trial might be due to a harmful effect of the "placebo intervention," rather than a beneficial effect of the vaccine. The study's author, Marie Huber, believes that Provenge treatment is harmful for older men and, is either harmful or ineffective for men under 65. The study has been criticized by Dendreon scientists and several experts.

On February 27, 2012, Dendreon reported 2011 full-year gross revenues from Provenge sales of approximately $213.5 million, a far cry from the $350 million to $400 million forecasts the company had released earlier. The net loss for the year was $337.8 million.

On July 30, 2012, Dendreon announced that the company would undergo a "strategic restructuring plan designed to accelerate the company's path to profitability and future growth." The plan involved closing the company's Morris Plains, New Jersey facility and eliminating more than 600 full-time and contractor positions over 12 months. Dendreon management determined that the manufacturing of Provenge could be handled through the company's manufacturing facilities located in Union City, Georgia and Seal Beach, California. Once implemented, Dendreon calculated that the company would be cash flow positive when net product revenue reached approximately $100 million in a quarter.

In December 2012, Dendreon sold the New Jersey facility to Novartis (NYSE:NVS) for $43 million. "Activated Cellular Immunotherapy offers the potential to treat a variety of diseases in a revolutionary way. We are pleased that Novartis has selected our facility to advance and accelerate their work in this exciting and emerging field," Christine Mikail, Dendreon's EVP of Corporate Development stated.

On March 18, 2013, Dendreon announced that it settled the lawsuit, In re Dendreon Corporation Class Action Litigation for $40 million, $38 million of which would be funded by Dendreon's insurers. Dendreon and the individual defendants involved in the litigation deny any wrongdoing.

Tough Competition

For many years, the only drug on the market for men with advanced prostate cancer was the chemotherapy drug, Sanofi's (NYSE:SNY) Taxotere (docetaxel). Docetaxel was brought to the forefront of prostate cancer therapy after a study was published in the New England Journal of Medicine in 2004 that showed that docetaxel in combination with the steroid prednisone resulted in improved survival when compared to Novantrone (mitoxantrone), which was the standard drug for advanced prostate at the time. Taxotere generated sales of $3 billion globally for the company in 2009, but it had a patent expiry in 2010 in the European Union. Sanofi's patent for Taxotere will expire in 2012 in Japan and in 2013 in the United States. Taxotere sales were $563 million, a decrease of 41.9% from 2011.

Recently, major advances and discoveries have been made in prostate cancer treatment. The FDA has approved several drugs and new therapies are in late stage development.

In addition to drugs, new radiation treatments can now target cancer cells while sparing the healthy tissue surrounding the tumor. Conformal radiation therapy (CRT) and intensity modulated radiation therapy (IMRT) utilize computers that map the prostate to precisely shoot radiation at the tumor.

Three drugs recently approved by the FDA to treat advanced prostate cancer are tough competition for Provenge. A new hormone therapy, Zytiga (abiraterone acetate) blocks the CYP17 to stop a man's body from producing cancer-fueling hormones. Another hormone therapy, Xtandi (enzalutamide) attaches to receptors on cancer cell receptors, preventing the production of testosterone and other hormones that help prostate cancer grow. Jevtana (cabatazitaxel) is a new chemotherapy that is often able to pass by the defense mechanisms of prostate cancer cells in order to slow cancer growth so that men with advanced prostate cancer live longer.

Johnson & Johnson's Zytiga (abiraterone acetate), an oral enzyme inhibitor of androgen biosynthesis was approved by the FDA in April 2011 to be used in combination with prednisone as a second-line advanced prostate cancer treatment. On December 12, 2012, Zytiga was approved for earlier use (before chemotherapy has been administered) after a 1,088 patient study found that chemotherapy-naive patients on Zytiga had a median survival time five months longer than those on the placebo. The cost of Zytiga is about $5,500 per month. In 2012, Zytiga sales totaled $961 million. Zytiga has been a big seller for J&J. Analysts believe the drug could reach global sales of $1.7 billion by 2016.

Sanofi Aventis's Jevtana (cabazitaxel), a cytotoxic chemotherapeutic approved for the treatment of metastatic CRPC (mCRPC) was approved by the FDA on June 17, 2010 to be used in combination with the steroid prednisone to treat men with prostate cancer. Jevtana was the first FDA approved treatment for advanced, hormone-refractory, prostate cancer that has worsened during or after treatment with docetaxel, a commonly used drug for advanced prostate cancer. Jevtana costs about $8,242 every three weeks. In 2012, Jevtana had sales of $235 million, a 20.2% increase over the previous year. Sanofi is hoping Jevtana sales will help offset declining sales of Taxotere. Taxotere is losing market share since the drug has been facing increased generic competition due to patent expiries in key markets.

Medivation's (NASDAQ:MDVN) and Astellas Pharma's (OTCPK:ALPMF) Xtandi (enzalutamide), an androgen receptor inhibitor, was approved by the FDA on August 31, 2012 to treat men with metastatic castrate-resistant prostate cancer who previously received docetaxel chemotherapy. The cost of Xtandi is about $7,450 per month. Net sales of Xtandi in the United States were $57.4 million in the fourth quarter of 2012 and $71.5 million for the full year 2012, following the availability of Xtandi for shipment on September 13, 2012.

Using Provenge as part of a combination therapy to treat prostate cancer has shown some promising results.

A case study in the February edition of the journal, Urology, describes a patient with metastatic castration-resistant, prostate cancer (mCRPC) who achieved a complete and durable biochemical response after being with Provenge while continuing with Xtandi therapy.

Researchers at the Veterans Administration Medical Center in Portland, Oregon obtained serial prostate-specific antigen measurements and bone scans to assess the patient's response to Xtandi followed by the addition of Provenge. The researchers found that this patient's PSA level became undetectable during treatment with Xtandi and began to increase again after 14 months. He opted for treatment with Provenge, while continuing with the Xtandi. This resulted in another complete PSA response six months after exposure to Provenge.

The researchers noted that Provenge typically does not produce significant PSA reductions, and, to the best of their knowledge, only one previous report of a durable complete PSA response in a patient with metastatic disease has been published. They concluded that the timing of this response supports an immune mechanism, and that the biologic rationale for the combination, coupled with the clinical result observed in this patient, provides a basis for studies of the combination of Provenge and Xtandi.

In April 2013, a Phase I study began recruiting patients to study the immune response and determine the tolerability and side effects of Provenge when given in combination with Bristol-Myers Squibb's (NYSE:BMY) Yervoy (ipilimumab) for patients with advanced prostate cancer. The estimated completion date is December 2015.

Earlier, a Phase I/II dose escalation trial of 33 men with mCRPC treated with Yervoy as a monotherapy and with radiotherapy suggested clinical antitumor activity with disease control and manageable adverse reactions. Two Phase III trials studying ipilimumab with radiotherapy as a treatment for mCRPC are in progress.

Several prostate cancer drugs in development look promising and could take market share from Provenge.

Another prostate cancer vaccine, Bavarian Nordic's (OTC:BVNKF) PROSTVAC-VF, uses a virus that has been genetically modified to contain prostate-specific antigen (PSA). A major difference PROSTVAC-VF and Provenge is Prostvac VF is an "off-the-shelf" form of immunotherapeutic agent that does not require each dose to be individually created for each patient. Researchers believe that the vaccine is formulated so that a patient's immune system should respond to the virus and begin to recognize and destroy cancer cells containing PSA. Early results with this vaccine have been promising. One study found that Prostvac VF extended cancer patients' lives by as much as 8.5 months, more than twice as long as Provenge.

In November 2012, a study in the Journal of Clinical Oncology found that Exelixis's (NASDAQ:EXEL) tyrosine kinase inhibitor, Cometriq (cabozantinib), demonstrated "unprecedented" results in a Phase II study comprised of 171 men with CRPC. Exelixis is also conducting a Phase III study to evaluate the effect of cabozantinib versus mitoxantrone plus prednisone on pain response and bone scan response in men with CRPC, as well as a study to evaluate the effect of cabozantinib compared to prednisone on overall survival in men with previously treated metastatic castration-resistant prostate cancer with bone-dominant disease who have experienced disease progression on docetaxel-containing chemotherapy and Zytiga or Xtandi.

During November 2012, OncoGenex Pharmaceuticals, Inc. (OGXI) announced the completion of patient enrollment in the primary registration Phase III study, known as SYNERGY, evaluating custirsen in patients with advanced prostate cancer. The study is designed to evaluate a survival benefit for custirsen, when added to first-line chemotherapy, in men with mCRPC. The SYNERGY study is the first of two, ongoing, pivotal Phase III studies evaluating a potential survival benefit for custirsen treatment in prostate cancer.

Over 1000 men have been enrolled to the SYNERGY study, at 142 sites primarily in North America and Europe. The survival primary endpoint data are event-driven and results are expected by the end of 2013.

OncoGenex is also involved in a study with Teva Pharmaceutical Industries (NASDAQ:TEVA) to see if adding custirsen tocabazitaxel/prednisone treatment can slow tumor progression and enhance survival outcomes compared to standard cabazitaxel/prednisone treatment in men with mCRPC. Treatment will consist of cabazitaxel/prednisone/custirsen versus cabazitaxel/prednisone. A total of approximately 630 patients will be randomized with equal probability to the two arms.

Angiogenesis inhibitors are also being studied as a treatment for advanced prostate cancer. These drugs are used to treat patients with other cancers. These drugs starve tumors by inhibiting its ability to grow new blood vessels. Celgene's (NASDAQ:CELG) Thalomid (thalidomide) and Genentech/Roche's (OTCQX:RHHBY) Avastin (bevacizumab) are approved to treat other cancers. These drugs are now being tested in combination with hormone therapy and chemotherapy in men with advanced prostate cancer.

Dendreon has several other compounds in its developmental pipeline.

Clinical Pipeline


Dendreon is developing DN24-02, an investigational active cellular immunotherapy (ACI) targeted at the HER 2/neu receptor.

On October 17, 2011, Dendreon announced the initiation of a Phase II clinical trial called Neu-ACT evaluating DN24-02 as a treatment of HER2+ urothelial carcinoma. The estimated primary completion date for the trial (final data collection date) is June 2016.

DN24-02 has completed two Phase I clinical trials for the potential treatment of patients with breast, ovarian and colorectal solid tumors expressing HER2/neu. This ACI product candidate targets the HER2/neu antigen and utilizes the same proprietary antigen-engineering technology as Provenge.

D-3263 HCI

D-3263 HCI is an orally bioavailable small molecule, which targets TRPM8. TRPM8 (also known as TRPP8) was identified through Dendreon's in-house discovery efforts.

TRPM8 is a calcium ion channel. Calcium ions mediate key cellular functions. Activating TRPM8 channels can induce programmed cell death (apoptosis) in TRPM8-expressing cells. Recent research indicates that TRP channels play an important role in cell biology and pathology.

TRPM8 is expressed predominantly in the prostate. It is over-expressed in prostate hyperplasia and multiple types of cancer including prostate cancer, breast cancer, colon cancer and lung cancer. Dendreon has synthesized small molecule agonists including D-3263 HCI that activate the TRPM8 ion channel and induce cell death.

In 2009, Dendreon commenced a Phase I trial evaluating D-3263 HCI as a treatment for advanced solid tumors refractory to standard therapy or when no other effective therapy is available. Preliminary results from the trial found that "men with advanced prostate cancer experienced preliminary results of disease stabilization."

On April 29, 2013, Dendreon released preliminary results testing D-3263 as a treatment for benign prostatic hyperplasia (BPH). Researchers found that D-3263 demonstrated the ability to reduce BPH alone and in combination with finasteride, a current treatment for BPH.

Preclinical Pipeline

Dendreon has in-licensed two additional antigen targets, carbonic anhydrase IX (CA9) and carcinoembryonic antigen (CEA), for the development of ACI candidates. Product candidates targeted at CA9 are in preclinical development for the treatment of kidney, colon, and cervical cancer. Product candidates targeted at CEA are in preclinical development for the treatment of breast, lung, and colon cancer.


On February 25, 2013, Dendreon reported results for the fourth quarter and full year ended December 31, 2012.

Net product revenue for the year ended December 31, 2012 was $325.3 million compared to $213.5 million for the year ended December 31, 2011. Net product revenue for the fourth quarter ended December 31, 2012 was $85.5 million, which includes a $3.8 million favorable adjustment to the company's charge backs reserve due to a change in estimate. On a pro-forma basis, excluding this adjustment, net product revenue for the quarter and year ended December 31, 2012 was $81.6 million and $321.5 million, respectively, up 5% on a sequential quarter over quarter basis and 51% year over year.

Net loss for the year ended December 31, 2012 was $393.6 million, or $2.65 per share, compared to $337.8 million, or $2.31 per share for the year ended December 31, 2011.

As of December 31, 2012, Dendreon had approximately $429.8 million in cash, cash equivalents, and short term and long-term investments, compared to $617.7 million as of December 31, 2011.


The research and advisory firm, Decision Resources, forecasts that the overall prostate cancer market will more than double in size over the next ten years.

Analysts are divided over whether Dendreon is a good buy.

On March 19, 2013, Zacks reiterated its "Neutral" rating for Dendreon, but lowered its price target for the stock from $5.75 to $5.50. On March 6, 2013, the ISI Group downgraded Dendreon from "Buy" to "Neutral."

On February 26, 2013, Roth Capital maintained its "Neutral" rating on Dendreon, but increased its price target to $6.30, up from $5. On February 26, Credit Suisse reiterated its "Neutral" rating on Dendreon, but raised its price target to $6, up from $4. On February 25, 2013, analysts at Brean Capital maintained a "Sell" rating on the stock with a price target of $2. On February 14, 2013, the Maxim Group downgraded Dendreon from "Hold" to "Sell." The firm has a $4 price target for the stock.

On January 31, 2013, analysts at Robert W. Baird reiterated its "Neutral" rating and $6 price target for Dendreon. On January 30, 2013, Cantor Fitzgerald raised its price target on Dendreon from $6 to $7, but the firm maintained its Hold rating. On January 24, 2013, Summer Street reaffirmed its "Buy" rating for Dendreon. The firm has an $18 price target on the company's stock. On January 11, 2013, Bernstein upgraded Dendreon from "Market Perform" to "Outperform" and raised its price target of the stock to $10.00, up from $7.00.

On December 3, 2012, the Jefferies Group maintained Dendreon's "Underperform" rating and $3 price target.

On November 12, Needham and Company started coverage of Dendreon with a $7 price target and a "Buy" rating.

On September 12, 2012, Wallace Beth initiated coverage on Dendreon and placed an $11 price target on the stock. On July 31, 2012, Lazard Capital downgraded Dendreon from "Hold" to "Sell" with a $4 price target. On July 31, JPMorgan downgraded Dendreon from "Overweight" to Mutual," and Deutsche Bank downgraded Dendreon from "Buy" to "Hold" with a price target of $7.00. Dendreon had its price target lowered by Barclays Capital from $12.00 to $6.00, which has an equal weight rating on the stock. Wedbush Securities and William Blair both maintained "Sell" ratings for Dendreon. Wedbush lowered its price target to $3, down from $4. William Blair lowered its price target to $5, down from $8.

On August 29, 2012, analysts at Baird maintained a "Neutral" rating for Dendreon with a $7 price target.

On July 31, 2012, Canaccord Genuity maintained a "Hold" on Dendreon, but lowered its price target to $6.00. down from $11.00.

On July 17, 2012, RBC Capital maintained a "Sector Perform" rating for Dendreon, but cut its price target to $8, down from $10.00.

On July 11, 2012, Bank of America downgraded Dendreon from a "Hold" to an "Underperform" rating.

On May 8, 2012, Leerink Swann downgraded Dendreon from "Outperform" to "Market Perform" with a price target of $13.00

On April 12, 2012, Citi maintained its "neutral" rating on Dendreon cut its price target on the stock to $10, down from $14.

On March 15, 2012, Stifel Nicolaus started coverage on Dendreon with a "neutral" rating.

On March 1, 2012, Imperial Capital maintained an "Underperform" rating on Dendreon shares with a $4 price target.

Despite the low marks the company received from many analysts, things may be looking up for Dendreon. During the fourth quarter of FY 2012, Provenge community urology sales grew 25% overall quarter after quarter and community oncology accounts grew by 4%. Community accounts represent 71% of total Provenge sales. In January 2013, the Sanford C. Bernstein brokerage firm predicted peak revenue of $799 million for Provenge by 2017 and 13% sales growth for 2013. Bernstein based its forecast on interviews with urologists. Community urology practices reported anticipated steady increases in their use of Provenge. None of the physicians Bernstein interviewed expected to reduce their use. Most expected to use Provenge in combination with Xtandi in the future, and "saw little threat from Zytiga."

During 2013, Dendreon stock has steadily declined. During January and February 2013, the stock was in the $6 range. During March 2013, the stock was in the $5 range. During April and May, the stock was in the $4 range. The stock has been badly beaten down over the past year. On May 7, 2012, the stock was at a 52-week high of $12.21.

Dendreon claims it has made great strides improving the reimbursements landscapes for physicians. The company reports that the average time to payment remains less than 30 days. The company has initiated a $5 million per quarter direct-to-consumer advertising campaign to "address a significant need for patient education and awareness." The company has also undergone a major restructuring and expects to reduce the cost of goods sold to below 50% of net product revenue in the beginning of the third quarter 2013.

The company continues to research investigational uses of Provenge, particularly in combination or sequenced with other treatments.

Dendreon is evaluating partnering strategies for European expansion. The company continues to enroll patients in the sipuleucel-T (Provenge) European Union open-label study, and expects a mid-2013 regulatory decision in Europe.

Is it time to time to give up on Dendreon? I don't think so. I think the company is finally moving in the right direction. The company has experienced rather consistent quarter over quarter revenue growth. The company has scaled down significantly and has a detailed plan to achieve profitability in the not so distant future. Studies using Provenge in combination with other prostate cancer drugs have also shown some promising results. I would not give up on Dendreon just yet.

Disclosure: I am long CELG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.