Dendreon Corporation (NASDAQ:DNDN)
NASDAQ OMX 27th Investor Program Conference Call
December 6, 2011; 01:45 pm ET
Dr. Mitchell Gold - President & Chief Executive OfficerPresentation
Dr. Mitchell Gold
Thanks very much. I would like to remind you that during the course of my presentation today I will be making forward-looking statements and I encourage you to refer to the most resent SEC filings regarding the risk factors associated with these statements.
So I think it’s important, you know when we think about Provenge and we think about Dendreon, it’s really important to maybe take a step back and put everything in perspective.
2010 last year was a critical year for us as we received approval of our first commercial product Provenge and this is the world’s first autologous cellular immunotherapy and it was really a transformational agent in terms of how we think about treating patients with late stage prostate cancer.
We launched this product in 2010 in a capacity constrained environment off of one facility that we had located in Morris Plains, New Jersey and then as we did that we worked throughout the course of 2010, a couple of months after we launched the product, there was a national coverage analysis that was launched on Provenge. We finalized that in the middle of this year. It came back very favorable in terms of what the reimbursement label looks like for Provenge and we had to really educate two different physician segments about Provenge.
This is a market that physicians weren’t aware of it at all. The metastatic castrate-resistant prostate cancer market was a market that these physicians weren’t aware off. So we had to educate both urologist and oncologist about a whole new disease state that they now had the capabilities to really treat their patients with, with a product like Provenge.
2011 this year was our first full year of launch and this is the year that we really started to grow the physician base that was prescribing the Provenge. In the third quarter of this year we reported gross revenues of approximately $66 million, that’s a 30% growth over our Q2 numbers, okay.
So we are continuing to grow this product on a quarter-over-quarter basis and we’ve guided the investment community to expect modest quarter-over-quarter growth for the next couple of quarters as we continue to grow the prescribing base of physicians for Provenge and we continue to educate them, both on this new positive reimbursement landscape that exists after the NCD was issued in August of this year and the Q that was transmitted. So we are in a much more favorable environment now in terms of reimbursement.
At the end of the third quarter we had over 425 sites that had actually fused Provenge. Our goal is to have 500 centers that are infusing Provenge by the end of this year and we are on track to accomplish that. More than 600 centers have already completed the in-servicing process, meaning they are getting ready to identify patients and infuse their first patient with Provenge and I’ll remind you that metestatic castrate resistant prostate cancer represents a significant unmet medical need for these patients.
There’s about 80,000 men in our label of asymptomatic or minimally symptomatic castrate resistant prostate cancer, but each year there’s about 30,000 to 35,000 men coming down, that are newly diagnosed men with asymptomatic or minimally symptomatic castrate resistant prostate cancer.
We expect that number to continue to grow and the reason for that is we’ve never seen more significant advancements in the field of prostate cancer than we have over the last couple of years and so there is more awareness in the physician community about a certain look for men that have this disease state and they can treat them with some of these newer agents.
Now, how do we go about generating an immune response against cancer? This concept of generating immune response against cancer has been one actually that’s been around for almost 100 years. Dr. Cole Lee (ph) who was a surgeon first discovered that his patients, after surgery that had success, some of his patients had resolution of their tumors and so that really started a quest to begin or understand how you could use the immune system to fight cancer and the way that we go about it is to use two key approaches, okay.
One key component of our approach is the concept called the antigen delivery cassette and that’s represented here and the antigen delivery cassette has two structures. The orange helical structure is the target antigen. For Provenge the target antigen that we’re going after is something that’s ubiquitous within prostate cancer, that’s called Prostatic Acid Phosphatase and we fuse that via a dipeptide link or the GM-CSF head, so you have a target antigent fused to GM-CSF.
Now, through that approach we can get about 1000 fold more efficient recognition from the immune system that we could if we just use the naked antigen all by itself and we manufacture this just like you would any other recombinant protein in large scale bioreactors.
The other key component is the patients own antigen-presenting cells and we isolate these through a standard blood collection procedure known as the leukapheresis or an apheresis. Those cells are collected and then sent off to one of the three manufacturing facilities in the US. We have a facility in New Jersey, we have another in Atlanta and we have a third facility just outside of LA in Seal Beach.
Now these immature androgen-presenting cells are exposed to our antigen delivery cassette, where they are taken out into the androgen-presenting cell and that cell then goes through a maturation process. The peptide or proteins are broken down and then displayed on the surface of the androgen-presenting cell.
We can detect certain cell surface markers as these cells start to mature, that give us a sense of how activated they become and there’s a key cell surface market known as CD54 or ICAM-1, that for us is our potency assay for how these cells have been activated and that actually correlates with clinical outcomes in our phase III study. In other words our potency assay for this product correlates with clinical outcome in randomized controlled trials.
Once those cells become activated against the target antigen, they are sent back to the physician’s office and infused into the patient over a 30 to 60 minute intravenous infusion, where they elicit a T-cell response against a tumor. Now that process is repeated three times over a one-month period for a complete course of treatment and that has a lot of advantageous.
First off you have a very high compliance rate. In other words you don’t have to worry about your patients taking an oral agent or not. But two, the patients can complete a course of treatment in one months time and not having to go into the physicians office every two to three weeks to get an infusion in chemotherapy. They finish it in one month’s time and they go on and do the things that they need to do and they can live a normal life.
Now in our clinical studies of Provenge in men with late stage prostate cancer, what we showed was a 4.1 month improvement in median survival in men with asymptomatic or minimally symptomatic castrate-resistant prostate cancer and this is the only agent that has shown a survival improvement in this patient population and because of that we see Provenge as the foundation of care for these men.
You get it onboard as I said in one month’s time and then these patients can go on and receive other forms of therapy later on that maybe chemotherapy, that maybe second line chemotherapy, that maybe second or third line hormone manipulation. But Provenge is the foundation of care to deal with men with asymptomatic or minimally symptomatic castrate-resistant prostate cancer.
Now the survival advantage that we reported in this patient population is the longest that’s been reported, but what’s also important to note is that these therapies have the potential to be very durable. When we look at the one, two, three and four year of survival in our clinical studies, what we see for example at three years; three years after receiving Provenge there’s a 38% improvement in survival in patients that have received Provenge, compared to those patients in the controlled arm. 32% of those patients in the Provenge arm are alive compared to 23% of those patients in the controlled arm and that’s something that’s very meaningful.
When you communicate that to a patient your not describing medians of where half the patients are alive and half the patients are dead. But your giving the patients at three years, what’s your probability of being alive based on these clinical studies and that’s something that is very understandable from a patient perspective and the physicians tend to use this to communicate this as the potential attributes of the product.
Now when you think about cancer in general, one of the scariest things about getting cancer historically has been the disease itself, but sometimes having to go through the side effects and the treatment itself. We all know what chemotherapy looks like, we’ve all had friends and family member, half of you go through that. Provenge offers a dramatically different side effect profile compared to that.
The most common side effects that we see with Provenge, which is an immunotherapy, are flu like symptoms. There are fevers and chills from low grade and short duration. They last for about one to two days and they go away. So you have to contrast that to what patients are typically used to the chemotherapy. It’s dramatically different and offers a favorable benefit to risk profile for the patients.
So we’ve seen a lot of progress in prostate cancer over the last several years. The first agent that we saw approved recently was Taxotere and Taxotere was used for patients with late stage prostate cancer. It had shown a 2.5-month improvement in median survival. We’ve seen several agents come out post Taxotere, such as Trivitana (ph) that are also showing improvement in overall survival. But we’ve seen nothing improved in the pre-taxotere setting, which is where Provenge sits.
So Provenge is the foundation of care for these men and then you’ll add other agents onboard down stream, whether it’s chemotherapy or second line hormonal manipulators that can be used and we see all these agents really not being competitive with each other, but the big decision making process for physicians is going to be how do you sequence these agents together, what’s the best way to use these, either in a sequencing way or in a concept with each other, to make sure that we can provide the patients with the maximum vent, very much like we’ve seen in HIV and so I think that the care of these patients with late stage prostate cancer is going to change dramatically over the next three to five years as we think about whole new forms of therapy really coming out to help these men.
So as I said, we launched Provenge in 2010. We are developing a whole new market and a whole new disease state and like any commercial product, we’ve had some challenges that we’ve had to deal with, that’s not unusual and we’ve really broken those down into three buckets that are areas of importance for us that we need to focus on.
The first for us was making sure that our physicians had confidence in reimbursement. As I mentioned early on, when Provenge was approved in 2010, Medicare launched a national coverage analysis on Provenge to determine which patient should be covered for it. Now that was finalized and that was disseminated to physicians this year and there’s now very much clarity on which patients are covered and accessible for Provenge and we are now communicating that out to our doctors and now 75%, more of them, almost all of our physicians now are familiar with the new national coverage decision that was issued and they are familiar with they key code that’s there.
If you also want to make certain just out of pocket expenses for the patient arm, our rate limiter for them getting access to Provenge and 75% of those patients have no out of pocket cost associated with the administration of Provenge; meaning that the co-pays are not a rate limiter for getting access to Provenge treatment.
So reimbursement is something that we focused on. We’ve cleared that hurdle from a technical perspective; we’ve educated our physicians about it and that’s an important element for making sure that Provenge could be used broadly across patients who can potentially benefit from it.
The second is patient identification. As I said earlier, this is a whole new disease state, but there were no products before. It’s a very large patient population. About 80,000 men in our label, but we need to now educate physicians to start screening for these patients. And so what we are really education physicians is these are men that are sitting in your practice, that have rising PSAs and these are men that should be screened with imaging modalities to look for metastatic disease, to see if they will be a candidate for Provenge and that message is resonating.
I mean many of these patients sit in the urology community and if you look at our book of business in urology six months ago, approximately 7% of our revenues came from the urology community, today approximately 20% of our revenues comes from urology community. So we are growing the urology business and we are encouraging screening, both there and in the oncology setting.
But the last section is the customer service section and unlike any other product that’s out there, Provenge is a truly personalized medicine and our interaction with the physicians is incredibility meaningful. So its been very important for us that we make the use of Provenge, the prescribing of Provenge and how its infused and to practice something that’s very streamlined, straightforward and simple for the physicians practices and I’m pleased to say that from Q2 to Q3 we’ve been able to cut our scheduling times down by approximately 20%.
So as I said, we launched Provenge in 2010 in a capacity constrained environment and we knew we needed to bring additional capacity online to meet the potential demand for Provenge, but also to make sure that we can supply Provenge in a very streamlined way as we are able to address the entire county. And so throughout the course of this year we’ve opened up additional plans in Los Angelus, as well as in Atlanta, Georgia, to make sure that we can supply Provenge across the entire country and we have been able to manufacture Provenge very consistently at a rate that’s consistent to what we did in our clinical studies.
There’s a lot of questions before we went commercial; could we manufacture this at scale in a commercial setting and I think we can definitely answer that. Our success rates in a commercial setting and relatively high volumes are consistent or better with that than we had in the clinical setting, so this is a scale in the process that has a broad actability.
Now we talked a lot about the US business itself and I want to talk a little bit about Europe. Now the European opportunity in terms of the patient population is probably twice the size of the US market. But when you look at the addressable population here is Europe, it’s probably on par with the US.
Our plan is to file our MAA in the EU sometime in the early part of next year. We are going to seek out a contract manufacturing partner to build out one of our manufacturing plants here in Europe for us and we are going to move that product and we are going evaluate potential partnering opportunities outside of that to make sure that we could commercialize Provenge in the European union as officially as possible and as I said, we expect our application to go in some part early time next year.
Its important for us that we continue to study Provenge both in earlier stages of disease, but because there’s so many new agents coming down the pipeline, to make sure that we do studies that help educate the physicians on the best way to sequence these agents together and how to think about using this and to continue with the care of patients with late stage prostate cancer.
And so some of those studies such as Provenge in combination with Zitiga will further decline the appropriate sequencing of after you get Provenge how long do you need to wait before you go on to steroid containing regimens such as Zitiga. We have a study called Neu-ACT that look at the use of Provenge prior to radical prostatectomy, in other words prior to patients having surgery and that was really designed to help us better understand the mechanism action, how Provenge works and to educate physicians exactly with what’s on in the tissue and we’ve seen some very interesting data start to come out of that study.
The Proact study was designed to look at different concentrations of antigen, in terms of lowering our overall cost of goods and we just started a phase II study in a different tumor type using an agent called DN24-02, starting in patients with HER2/neu positive invasive bladder cancer. Now these are patients that following a cystectomy have very few treatment options available to them and that opens up an opportunity that I’ll be talking about in just a bit about how we not only look at Provenge, but we expand our technique of isolating the immune system and targeting it against other tumor types.
So, when you look at our pipeline overall, we’ve done a lot of work on Provenge and prostate cancer itself, but Dendreon is a company that’s beyond Provenge. The concept of using the ADC to target other different antigens is very important to us and we’ve had to put a lot of our resources in the development of Provenge, in the commercialization of Provenge over the last decade, but now is the time to really think about what else can we do.
And so the DN24-02 program that began rolling into a phase II study earlier this year is looking at patients that have invasive bladder cancer. This is much different than superficial bladder cancer. Invasive bladder cancer is a deadly disease. These are patients that go on and get cystectomy and then patients get randomized to get DN24-02 or best support of care versus survival as a principal end point of that study. And that will give us additional insight into how we would design a phase III study that could potentially be a registration study for us for that indication.
Beyond DN24-02 we have other antigens in our portfolio. CA9 is a very well known antigen that’s highly prevalent in renal cell carcinoma. So between Provenge, the new venture program with DN24-02 in bladder cancer and CA9 in renal cell, we are covering three different GU malignancies that target the same physician base that we are targeting commercially with Provenge. And then we have a single small molecule program that really is a legacy program for us that we are developing.
So when you look at our balance sheet, the company is very well capitalized and we ended the third quarter with just over $560 million of capital in our balance sheet. As I said we had $66 million in revenue for the third quarter. We announced for the first time that we were receiving royalties for a patented state that we had through an acquisition of Corvas, a company we acquired back in 2003 and that we are receiving royalties from Merck on the sales of Victrelis, and that brings additional cash flow into the organization.
We’ve guided the streets, expected us to be cash flow break even when we were at a run rate of $500 million and that we expect that the cash that we have on hand is sufficient for us to execute on our US operating plan without having to go back to the capital markets.
So with that I’ll close and I’ll open the floor for any potential questions.
Dr. Mitchell Gold
Right. So the dosing regiment for Provenge that’s approved by the FDA is three infusions over a one-month period and then you’re done. And we’ve looked at what would happen if you gave what’s called the booster infusion at some point in time.
For example, we did a study called P11, where the patients got the same three doses of Provenge and then after their PSAs reached a certain level we checked to see if there were still an immune response there. On average that was about two years after receiving their first three doses and what we saw was that there was still a persistent immune response against PAP, and we gave a single booster infusion of Provenge and what we saw was that was magnified even higher.
So this concept of boosting at some point in time and amplifying the immune response even further, even though it sticks around to something that’s very interesting to us and something that we are going to continue to study, not only in the early stage of prostate cancer, but we would like to study in our current label dedication as well.
But the take home message and you see it from the survival data there, when we look at the long term survival data, is it isn’t just about the three infusions. It’s that the immune response sticks around for a while and that potentially gives the patient clinical benefit downstream, to benefit to live longer.
Any other questions? Okay, thanks very much.