Seeking Alpha
Profile| Send Message| ()  

Dendreon (DNDN) currently has one FDA approved drug on the market. Provenge is a prostate cancer vaccine treatment manufactured by Dendreon and so far its run in the market has been a disappointing one. The fact that Provenge costs $93,000 for treatment over the course of one month has completely stifled sales.

Furthermore, some of the patients treated with Provenge have spoken out about the ineffectiveness of the drug on their prostate cancer. This will cause Dendreon share to continue its downward spiral for the rest of this year. Dendreon will now be focusing intensely on developing its pipeline drugs and attempting to get an effective product on the market. Unfortunately, only one drug in Dendreon's pipeline is in Phase 3 clinical trials. The others are in Phase 1 or pre-clinical trials.

Sipuleucel-T is a prostate cancer vaccine. Dendreon has a very large market demand for effective prostate cancer drugs. The second leading cause of cancer death in men is cancer of the prostate. The only drug treatment for prostate cancer is Docetaxel, which is simply chemotherapy. Docetaxel on average increases survival rate in patients for two-three months. It is obvious that Dendreon is making a smart move and developing drugs for a market in need. Two things will lead to the success of Sipuleucel-T. The first is if Sipuleucel-T is effective, even just a little bit, in prolonging or curing prostate cancer. The second is making sure that Sipuleucel-T is affordable for patients. Hopefully, Dendreon will learn from its mistake of overpricing Provenge.

The clinical trial data for Sipuleucel-T is relatively positive. 512 patients were enrolled in the trial, 171 of which received the placebo and 341 received the treatment. After the study had concluded, 331 of the 512 patients had died; 210 of the 341 patients receiving the actual treatment had died. The average increased survival time of those taking Sipuleucel-T was four months longer than the patients receiving the placebo.

The reduction in the risk of death due to prostate cancer was reduced by 22% when treated with Sipuleucel-T. After 36 months of treatment, the survival rate in patients with prostate cancer was 32%. The survival rate of patients receiving the placebo after 36 months was 23%. These numbers signify that while Sipuleucel-T is not a complete cure for prostate cancer, it can delay the progression of the disease rather significantly. The side effects that were most common after treatment include chills, fever, nausea, fatigue, and headache. All of these side effects were reported to have resolved within a few days of treatment. After a thorough evaluation of the clinical data, Sipuleucel-T is in good standing to become FDA approved. The drug is effective and the side effects are not deadly or impair quality of life.

The biggest competitor for Dendreon is Northwest Biotherapeutics (NWBO) and its prostate cancer treatment DCVax. Working along the same lines as Provenge, DCVax is a treatment that draws live cells from the patient, creates a recombinant cell that now has the ability to fight off the cancer and re-injects them into the patient. The patient in theory now has cells that can destroy the cancer or at least hold it at bay and increase survival chances.

There are a few reasons why DCVax could cripple Provenge sales for Dendreon. If Provenge drops anymore profit, it could spell trouble for developing and passing Sipuleucel-T. The Phase 3 clinical trials for DCVax have suggested that the drug delays the progression of the cancer, as well as induces an immune response targeting the cancer. The Phase 1 and 2 trials were conducted with 32 patients afflicted with both metastatic and non-metastatic cancer. After receiving treatment, none of the non-metastatic patients' cancer had progressed after 28 weeks. At 59 weeks, the cancer had only progressed in half of the non-metastatic patients.

There were no side effects observed with DCVax, which is a huge upside for Northwest. The drug seems to be effective and there are no side effects. Northwest is also developing DCVax to attack brain and lung cancer as well. Lung cancer being the number one cause of cancer related death in men. With such a strong pipeline and a cheaper and possibly more effective treatment than Provenge and Sipuleucel-T, Northwest seems to be poised to surpass Dendreon in the next few years.

Progenics (PGNX) is releasing a new drug, Methylnaltrexone, towards the middle of 2012. The capital created from Methylnaltrexone will surely be used to develop its prostate cancer drug, PSMA ADC. If PSMA ADC passes clinical trials and moves into the market within the next few years, Provenge will be facing very steep competition. Progenics is in decent standing to pull ahead of Dendreon and it would probably be wise to invest in Progenics instead of Dendreon.

Sanofi's (SNY) prostate cancer drug Zaltrap has been through clinical trials and applied for FDA approval upon the completion of its phase 3 trial. Many believed that Zaltrap was going to provide market competition to Provenge and Sipuleucel-T. Dendreon has luckily caught a break. A sister Zaltrap Phase 3 trial released results revealing that the data failed complete the specified requirements for increased patient survival. FDA approval is seemingly unreachable for Zaltrap at the moment. A drug that is ineffective in a Phase 3 trial means that Zaltrap will have to return to the development line for improvements. Dendreon's drug Provenge will not see any competition from Sanofi, and Dendreon will have plenty of time to develop Sipuleucel-T before Zaltrap is released.

Right now it is just too risky to invest in Dendreon. The best action to take would be to wait and see if Sipuleucel-T passes FDA regulation. While the drug seems to be safe and effective, no one can ever be certain if the FDA will pass or deny a drug. Never invest in a drug before it is FDA approved. Another wise move would be to keep an eye on Northwest, while DCVax moves along the clinical phases. Should the trial data show positive results, northwest may be a much better and stable investment than Dendreon.

Source: Dendreon Could Dive If Sipuleucel-T Fails